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Opting For Refinance-A Nice Way To Save Money Substantially
johnhoots
A homeowner is said to be opting for home refinance if he trades in his first mortgage for a new mortgage. When someone opts for home refinance, his property will be appraised afresh and his credit history will be studied once again. The homeowner on his part can ask for a property report and see if there are any more security interests or liens attached to the property. Once all these factors are determined and approved, the homeowner can meet the lender and move the home refinance application process.

The new loan amount got through home refinance can be used to repay existing mortgage and helps the homeowner save money only if the current interest rates on the principal are lower than what he is already paying. Apart from repaying an existing mortgage amount, the homeowner can use the home refinance amount to refurnish or repair his home, make additions or expand his property. He can also use the money for other expenses like medical bills or college fees. He must be very careful when using the money for purposes other than the home for then he will have 2 mortgage amounts to repay.

Here is the simple methodology that is followed in the home refinance process:
Check credit
Estimate property value against amount due
Study interest rates
Get expert advice

Cleaning up credit history with the credit bureau can help a borrower get quick home refinance at low rates. If there are discrepancies, check and correct them. If you owe any money, make sure that all debts have been paid correctly so that there are no outstanding amounts that will reflect poorly on your credit history.

Once this is done, you must check the property value against the amount of your mortgage that is still outstanding. A real estate broker can help a person get an accurate estimate of his property's worth. If this value is less that what is still owed, then the home refinance rates will not be attractive. If the value of the property has appreciated considerably, you can go ahead and check out prevailing interest rates. You do not have to go with the current lender you are doing business with. Instead, go online and check prevailing interest rates and home refinance terms among other top lending institutions and opt for the one who makes you the best offer.

It is always wise to get help from a well-established local real estate agent if you want to go for home refinance. He can give you accurate details of the existing real estate market, interest rates and other options like fixed rate refinancing, cash-out refinancing, adjustable rate refinancing and more. This will help you arrive at the best decision that will suit your personal budget. Using a specific refinance calculator can help you cover all your financial possibilities regarding home refinance.

A mortgage calculator meant for refinancing gives a person a good estimate about whether refinancing is a good option for his needs. You will need to enter information like current loan amount, term period, interest rate, refinanced mortgage, refinance costs, prepayment penalties, discount points, closing costs and so on. The mortgage calculator will indicate to the borrower if the current rate of interest will actually help him save on mortgage payments in the days to come. One can find these calculators in many mortgage sites.

The refinance mortgage calculator uses a break-even formula to give information on the value of refinancing. It will give you details about the difference in existing and future mortgage payments. This difference amount will be the savings you will make if you opt for home refinance. By dividing the closing costs of the new loan by monthly savings you will receive a break-even point, which will be stated in months.

If a homeowner plans to live long term in his home, the break-even analysis will show him that refinancing is a good option for he can then regain his investment. Consult your tax attorney too to ensure that your tax deduction amount can be reduced by lowering mortgage interest amounts. Get expert advice whether it is better to refinance now or wait for a few months. Analyze the market and make the right decision.

Article by John Hoots of Chicago, who is a specialist in real estate investments. For more information on Chicago mortgage loans, visit his site today.

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