Do You Want To Refinance?

As time goes on and the economy doesn’t seem to be picking up as fast as we’d like, many homeowners are searching for methods to make their monthly budget a little easier to meet. One of these ways, for homeowners, is to look into refinancing your home. Refinancing in order to get lower monthly payments is an excellent long-term source of “making” extra money each month. It’s a little like getting a raise at work, except this can be more long-term and less dependent on your employer.

The Real Estate Settlement Procedures Act (RESPA for short) protects you when you get a new mortgage or refinance your existing mortgage by requiring mortgage brokers to be upfront about their fees, costs and broker markup prior to writing your mortgage. The powerful banking industry lobby got this law to exclude standard banks; therefore, you have to be more diligent when shopping for a mortgage from a regular bank rather than a mortgage broker.

Of the two ways of lowering your monthly payment, one is better than the other. The two ways are to extend the life (term) of your loan — but be extremely careful here, as you could wind up paying substantially more over the life of the loan, even if the interest rate is lower. The second way is to refinance at a lower interest rate while keeping the same term (length of loan). This method is the preferable of the two, for reasons that should be clear in a moment.

The bank won’t tell you that their interest rates are marked up; first, it’s not in their best interest to do so, and second, most non-management bank employees aren’t aware of how much (or sometimes even whether) the bank is increasing the rates.

Now that you know some of your options, you can make a more informed decision. There are quite a few options available that are able to help you during this time.

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