I live in Philadelphia, PA and own a home. Now a days everyone is talking about re-financing their home loan. Someone told me that even the President has urged people to.
Should I get my home loan re-financed? If yes, why and how? Can someone please guide me? Are there any organizations or individuals who can help? It will be appreciated.
By shoaibmoman from PA
I am a realtor in your area. The first question is what is your current interest rate on your present mortgage and how many years do you have left. The reason people refinance is to reduce their mortgage payment by obtaining a lower interest rate. Unfortunately there are charges involved in refinancing which can be rolled into your new mortgage. It makes sense to refinance if there is at least a 1/2% to 1% between your old rate and your new rate. Any reliable mortgage company can help you with the refinance. Even your bank can handle it. Also, if you refinance your home, the application process will be the same as when you purchased. In other words, you need to qualify to carry your new mortgage (have sufficient income and good credit). Let me know if you have other questions.
The new federal program to help homeowners refinance or modify their loans is called Making Home Affordable. There is a tool that quickly tells you if your current mortgage is backed by Fannie Mae or Freddie Mac and if it is you may be able to benefit from the program.
As the realtor said the answer is maybe. Depending on the difference in the finance rates. Remember there are always closing costs with refinancing. These costs can be up to $3,000.00 or mre depending on which state you live in. The closing costs is basically money thrown away. Would you save more money by simply paying that $3,000.00 onto the principal of your present loan?? In my case the answer was Yes.so I didn't refinance. It always makes sense to pay a little extra on your principal every month even if it's only $10.00 it saves you huge amounts of money in the future in interest costs. However make sure you tell your mortgage company that that extra money is for the principal only...otherwise they will apply it to some other costs and your effeorts are lost.
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