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When Should I Refinance My Mortgage?

When you refinance a mortgage you pay off your existing mortgage loan and replace it with a new mortgage.  Homeowners might want to refinance for several different reasons.  Some of the most common reasons include obtaining a lower rate, shortening the mortgage loan term, converting from a fixed-rate mortgage to an adjustable-rate mortgage (or vice versa) and tapping into the home's equity to finance a major purchase or consolidate debt.  Each case can involve benefits, but also poses pitfalls.  Since refinancing can cost as much 1% and  - just like taking an original mortgage - requires an application, title search, and appraisal fees, homeowners need to carefully analyze all of the factors involved before initiating the process to determine whether their refinancing is truly beneficial.

Again, some of the most common reasons for refinancing are:

1.  To Obtain A Lower Interest Rate 

Lowering the interest rate on an existing loan is one of the best reasons for refinancing a mortgage.  The rule of thumb historically was that it was worth refinancing if your interest rate could be reduced by 2% at least.  In the current low interest rate environment, many lenders have made the case that a savings of 1%, or even less, is enough of an incentive to refinance.  

Reducing your rate helps you save money by lowering your monthly payment.  For instance, a $100,000 home with a 30-year fixed rate mortgage that has a 3% interest rate will have a monthly payment of $421. With a 2% interest rate, the payment will be reduced to $369.  If you want to simulate more payment scenarios use this mortgage calculator

Alternatively, you could obtain a lower rate and get a mortgage that allows you to continue to pay the same payment each month ($421, in the above example) and to apply the difference between the interest you pay and the lower interest you could pay to lowering the total owed – i.e., amortizing the mortgage principal.   This strategy would enable you to pay off your mortgage years earlier. 

Check 30 year mortgage refinance rates where you live.

2.  Shorten the Loan Term 

Whenever interest rates go down, homeowners frequently have the chance to refinance their existing loans to a shorter term that enables a much quicker amortization and, hence, more home equity built.  For the $100,000 home with a straight-line 3% 30-year fixed-rate mortgage that involves a monthly mortgage payment of $421, approximately $171 is attributable to paying down or amortizing the mortgage.  If you were to refinance at 2% and shorten the term to 15 years, the monthly payment would go up to $643, but over $440 of that amount would be attributable to mortgage amortization in the first month (and that amount rises from there).   You can play with your own numbers and extrapolate how shortening your term loan would accelerate amortization of your own mortgage with BestCashCow’s mortgage calculator.

If you have a fixed-rate mortgage in a rising interest rate environment, it will make much less sense to shorten the loan term in order to pay off your mortgage quickly.  Instead, you would be better served by adding to your monthly mortgage payment or by making annual or semi-annual lump-sum payments in order to pay down the mortgage balance.  Before making any excess payments, you should be sure that your mortgage lender permits your mortgage to be paid down without a penalty.

3.  Convert Between An Adjustable-Rate Mortgage and Fixed-Rate Mortgage  

Although an Adjustable-Rate Mortgage (ARM) will often start out with a lower rate compared to a fixed-rate mortgage, frequently periodic adjustment will result in increased rates making them higher than fixed-rate mortgages that are being offered.   The impact can be costly in a rising rate environment, even though many ARMs have escalation clauses that limit the amount that the ARM can adjust upwards each year.  Converting to a fixed rate mortgage can often both lower the interest rate and fix the interest rate for the longer term.  It also eliminates the worry about interest rate increases in the future. 

On the other hand, it can be financially beneficial to convert from a fixed-rate loan to an ARM when interest rates are falling.  The ARM's periodic rate adjustments can result in lower interest rates and monthly mortgage payments that are smaller, eliminating the need to refinance in order to take advantage of lower interest rates each time they go down.  Even in a stable or rising interest rate environment, it might also benefit homeowners who are not planning to stay in their home beyond the fixed period of the ARM loan to convert to an ARM, as the rate during the fixed period (usually 5 years) is often lower than that for a long-term fixed rate mortgage.

4.  Consolidate Debt by Tapping Equity

Refinancing your home to consolidate your debt is the most common reason that homeowners refinance.  It is often attractive to pay for major expenses, such as Obamacare premiums, college education and home remodeling costs, with the equity that you have built in your home.  It is often not only a lower interest rate than the other types of loans that might be available, but because mortgage interest on your primary and secondary homes is usually tax deductible, it can be a solid tax planning strategy.   But, while it may be a financially sound idea, the reality is that, especially if you are approaching retirement, it may not be wise to increase the length and/or amounts of your monthly mortgage payment.

Those who need or want to tap into their home equity for major expenses will often find that a home equity loan is a more attractive option, as it does not require the same amount of work or the same costs. 

See the best home equity rates where you live here. 

Should I Pay Off My Mortgage Early?

Paying down, or paying off, your mortgage will open up a world of possibility.

There are a lot of people who often wonder whether they should think about paying off their mortgage early. The answer is rather simple.  Most of the time, the answer to any given situation would be a resounding “yes”.

There can be a world of freedom and happiness out there for you once you have the biggest monthly expense no longer looming over your head. 

Regardless of what stage you are at in life, it is important to recognize that the most successful and happiest retirees are those who eliminated their mortgage payment or at least drastically reduced it before they started in on their retirement.    Quite simply, no matter what you are age, the stress of a mortgage being lifted will end up being well worth its weight in gold. After all, paying off your mortgage will end up taking a huge concern off of your plate.

Of course, having a outstanding mortgage can give you the flexibility to essentially walk away from a bad purchase with limited liability, as many people did in 2008 and 2009.  And, you never know just how the market is going to go and there is no guarantee it will go up.

Nevertheless, in an ordinary environment, you do not easily walk away from a mortgage with complete impunity.  It is a liability that is not going to easily be forgiven, and any proper retirement planning does not involve defaulting on a mortgage.  If you are able to pay your mortgage off by the time that you retire, you will have added peace of mind. It cuts back on the amount of income that your safety net for retirement will need to take care of. If the burden of paying your mortgage goes away, you will have more freedom with your budget for the happier things in life.

At any stage in life, extinguishing a mortgage creates what is known as a deflationary moment. A deflationary moment is something that will not happen often in life, as there are not a lot of services and goods in our daily life that are becoming less expensive.  (It doesn't matter if you are looking at daycare, gasoline, land, groceries or something else, things are always getting pricier. With this sort of inflation, when will you see deflation? The answer is actually rarely, if ever.)  The prices will generally always be on an upward climb.

The deflationary moment happens because you deflate the money that goes out the window for daily life without impacting your lifestyle.  After you no longer have a hefty mortgage, you gain flexibility that allows you to live where you want and in the size home that you want. Some folks will choose a home that is a bit smaller and fits their needs a bit better after retirement.

When you own a home without a mortgage, you can easily transition into a smaller home that is a lot easier to maintain. Maybe you want to have the money so that you can buy two homes that are in very different locations, such as the one that is in the mountains, or one that is at the beach. When you want to spend several months in one location with your grandchildren or extended family, or you are hoping to take care of someone in need, you will not have to worry about a mortgage payment while you are away. 

The flexibility will dramatically increase after you pay off your home, which will give you a chance to live where you want and how you want.

When should you think about pulling the trigger to pay off your mortgage?

Whenever people ask how much they have to have in the bank for paying off their mortgage, it is difficult to have an actual number. The best advice is the one-third rule. This means that if you can pay off your mortgage while not using any more than one-third of the non-retirement savings that you have, you should consider paying off your mortgage today. 

As an example, if you owe about $55,000 on your house and you have roughly $190,000 in your savings, excluding any IRA or 401(k) funds, you can look at the one-third rule. You will have the ability to pay off the mortgage, plus you will have plenty of cushioning left over for any unexpected expenses. If it will cost you more than one-third of any non-retirement savings that you have to pay your mortgage off, you should wait. It can cause more stress over the long term if you are lacking the cash in your bank simply because you paid off your mortgage. 

Here are 5 steps that you can follow early in life to pay off your mortgage faster:

1. Buy A Home You Can Afford

When you are looking to finance a house, you will need to be prequalified. The bank is going to look at the overall picture of your finances and then spit out an amount that you can get a loan for. Some will use this amount to set a budget for housing. However, keep in mind that the bank is just guessing. Examine own your monthly budget and determine what you want to spend on a home.  If you are a prudent financial planner, you may decide that is is much less than what the bank tells you that you can afford.

2. Get A 15-Year Mortgage

When you calculate the differences between 15 and 30-year mortgages, a 15-year will involve higher monthly payments as there is greater amount allocated to the amortization component monthly, but the advantage is that you save on total interest over the life of the loan due to the shorter term and, usually, lower interest rate.   

Check out the best 15-Year Mortgage rates where you live now.

3. Set A Target Payoff Date

Take a look at BestCashCow’s online mortgage payment calculator to help you determine a goal for a payoff. Post reminders of the goal so that you can remember that you have a strong plan in place.

4. Start Automatic Payments

Most loan providers will allow you to set up automatic bi-weekly payments, but some may only do so for a fee. You can call your mortgage company to go over all of your payment options to see what works best. However, you will see that an automatic payment will be easier to deal with than trying to remember to send out a payment each month or every two weeks. 

5. Cut Expenses And Increase Earnings

Review your budget all the way through and try to cut expenses where you can, while also working to boost your earnings. This could be as simple as cutting out the use of your credit card, as those purchases can really add up and your finances take a blow because of it.

How Much Mortgage Can I Afford?

Many people equate the purchase of a house with finally finding success. There are new buyers entering the market every day, looking for their dream property. The market is still favorable for them at this time; mortgage rates are down and homes are listed at good prices, which means that new buyers find themselves in a good position.

Approximately 33 percent of home sales are completed by new buyers, people who have never owned a home in the past. These individuals are at an advantage right from the beginning; with a little research, they can pull up facts and figures about the home that they are interested in. That is why 90 percent of buyers go on the Internet to research properties during the time that they are looking for a house.

Compare 30 Year Mortgage Rates Where you Live

While going on the Internet certainly helps the home buying process, it doesn't give you all the information that you need. In particular, many new buyers are at a lost as to "how much house" they can fit into their budget.

However, even that statement is a little misleading. Instead, the buyer should ask themselves what they can pay and what they want to pay. There are a few ways to figure out the answer to that complicated question.

By looking at a few different factors, buyers can feel secure and happy about their purchase. In addition, they will not have to worry that they will struggle to make their payments.

Look At Several Models Of Home Affordability

There is no one method that will help you figure out what you should spend on your house. Instead, you need to examine the issue from several angles to determine what homes fit into your budget.

For example, the lender may tell you that you can spend up to $300,000 on a house. However, a $300,000 home would give you a mortgage that is well in excess of what you are paying for rent. As a result, you may determine that you only want to spend up to $200,000, even though you could technically spend more because you just aren't comfortable with such a high mortgage.

There are a few ways that new buyers work through how much they should spend on a house.

Think About What Your Lender Says

You can quickly figure out how much house you can purchase by getting the information from your lender. The loan officer will look at your credit, how much debt you have, how much money you make and how much money you have for a down payment. He or she when then determine the maximum amount you can spend on a house.

This is nice information to have, but many new buyers do not want to spend as much as they can. For example, the lender may say that you can have payments each month that takes up 40 percent of your gross income. These payments would be for your mortgage, any loans you have, or any other debt you carry.

Therefore, if you make $4000 a month, the lender might say that you could pay $1600 a month in payments. However, after taxes and fees, you don't make $4000 per month. You might also want to save and put money away for retirement.

If you spend the maximum of $1600 per month in payments, you may not have as much as you would like for other living expenses. It all depends on your needs and wants.

Therefore, the number that your lender gives you does not factor in the way that you like to live or what you want for your future. Therefore, think about that number, but take it a step further by determining how much you personally are willing to spend.

Figure Out What Makes You Comfortable

Home ownership does not need to keep you awake at night, filled with anxiety. If you go about the process correctly, your mortgage payment will cause you no more undue stress than your rent does.

First, you need to figure out how much you would like for your mortgage to be. Begin by thinking about how much you pay in rent. Obviously, that amount will be applied to your mortgage instead, so you have a figure to start with.

From there, think about your monthly budget. Are there things that you are spending money on that could be cut out? Track your spending for a period of time to see.

Anything that you don't need to spend money on, you should not spend money on. Take that amount and add it to the number for your rent. When you are done, you will have an amount that you feel good about paying each month.

After that, speak to a mortgage lender. Tell the loan officer what your maximum payment is. He or she will then look at private mortgage insurance, homeowner's insurance, and taxes. They will figure out how much will be applied to your interest and how much will be applied to your principal.

Live The Way you Want

Ideally, you want to purchase a home and keep your lifestyle the way that it is. More and more buyers are opting for this when they purchase a home. In 2015, NAR released a survey that polled people with student debt that also bought a house. Despite the fact that these buyers now had a mortgage to contend with, only 50 percent cut back on entertainment and other non-essentials.

Depending on where you live, you may be able to buy a house and secure a mortgage payment for the same amount that you pay in rent. If you are one of the lucky ones, your lifestyle will not need to change.

However, in general, it is a good idea to set a monthly budget and cut back on your spending before you buy a home. That does not mean, however, that you need to give up on everything that you want; you should still be able to indulge every once in a while.

What Happens If You Think You Can Spend More Than The Lender Does?

The lender has the ultimate authority when it comes to how much mortgage you qualify for. This is true even if you feel that you can pay more than the lender thinks you can.

While that may be frustrating at first, it is important to remember that lending limits were established as the result of a lot of data. If their number is smaller than yours, you will likely be in better shape if you spend what the lender thinks you can afford.

Mortgage rates are very affordable right now, so it is a good idea to start looking at homes if you are interested in buying. Find out how much you are approved for, and then go from there.

Is a Reverse Mortgage Right for You?

What’s a ‘Reverse Mortgage’?

A reverse mortgage is a type of mortgage that allows a homeowner to borrow money against the value of their home. The borrower does not have to repay the mortgage’s principal or interest. The mortgage is repaid when the house is sold or the borrower dies.

After accounting for the mortgage amount, the rate of home appreciation, the loan’s length, and the accrued interest rate, the transaction is structured so that it ensures the amount of the loan will not exceed the home’s value over the loan’s life.

Looking for a regular mortgage?   Get the best rates here.

The lender often requires that there are no liens against your home. All existing liens should be paid off with proceeds from the reverse mortgage.

A reverse mortgage provides people with the income they can tap into. The main advantage of a mortgage is that the borrower’s credit rating is not relevant, and in some cases, may not even be checked since the borrower does not need to make any payments.

With a reverse mortgage, the home serves as collateral. When the borrower dies, the home must be sold to repay the mortgage. In some cases, the borrower’s heirs will have the option of repaying the mortgage and retaining ownership of the home.

The origination costs on a reverse mortgage are much higher than other types of mortgages. These costs accrue interest and become part of the initial mortgage balance. If the borrower is a senior citizen with good credit they should carefully analyze their options to determine if a home equity loan or traditional mortgage is a better choice for their situation.

How Does a Reverse Mortgage Work?

A reverse mortgage is designed to help seniors become financially stable during retirement. This is a type of home equity loan, intended for people who have a fixed income. The money available to a borrower is determined by the borrower’s age, how much the borrower owes on their mortgage and other home loans, and the home’s values.

Older borrowers can draw more money through this loan program. The youngest spouse living in the home is the basis for calculating the loan amount.

A borrower can receive payments from this mortgage as a line of credit, a monthly payment, or a lump sum.

Borrowers won’t have to make payments as long as they – or their spouse – lives in the home. Yet, if both the borrower and their spouse pass away, or move out of the home, then payment is due.

If the borrower, or their heirs, sell the home, the proceeds go towards repaying the loan. If the home is worth less than the amount owed on the loan, all the sales proceeds will go towards repaying the loan and the mortgage will be considered paid.

There have been numerous news reports in the past few years of spouses being evicted after one of them, the one listed on the reverse mortgage, passes away. The new reverse mortgage rules, which took effect in 2014, offer better protection for the nonborrowing spouse, which allows them to stay in their home, after the borrower’s death.

Will I Still Own My Home?

Some people believe that if you have a reverse mortgage, the bank owns your home. That’s not true.

With a reverse mortgage, the bank has a lien on the house, the same as a tradition mortgage or any type of home loan. The mortgage has the first claim on any proceeds from a home sale. But, the home itself is still owned by the borrower.

There are some restrictions that apply to ownership of a home with a reverse mortgage.

This is a type of owner-occupied loan. The home must be occupied as a primary residence by the borrower or their spouse. The house cannot be leased to another resident.

Why Do People Take Out a Reverse Mortgage?

Many borrowers use their reverse mortgage to pay down their debts and cut their monthly paymnts. These debts include consumer debt, home equity loans, and the existing mortgage.s

Others may use this loan in the form of an open line of credit to help cover unexpected expenses.

By having funds in a line of credit, a senior can hold onto other assets like stocks and bonds. They can use the funds from a reverse mortgage to cover unexpected costs, instead of having to sell off their other assets.

The Popularity of Reverse Mortgages

In the 1990 fiscal year, the program’s first year, only 157 reverse mortgages were made, according to the NRMLA. The number of reverse mortgages taken out annual, spiked in the 2000s, peaking at 114,692 loans in the 2009 fiscal year.

During the Great Recession, the number dropped sharply, going down to 79,106 the next year. During the 2015 fiscal year, which dated from Oct. 1, 2014, through Sept. 30, 2015, people took out 53,372 new reverse mortgage loans. This was slightly higher than the 51,642 reverse mortgages taken out in 2014.

Since this program began, a total of 911,314 reverse mortgages has been taken out, according to the NRMLA. That number is expected to reach 1 million during the first half of 2016.

Take the Interest and Fees into Account

If you take out a tradition mortgage, the interest is included in your monthly payments. You pay a little bit of interest at a time. Since a borrower doesn’t make payments, during the life of the loan, the interest on a reverse mortgage builds up. The interest rate for a reverse mortgage is like other types of mortgages.

That means over the life of the loan, the amount of debt will increase. The interest can “eat up” any equity remaining in  your home.

You also need to remember that although a reverse mortgage borrower doesn’t have a mortgage payment to make each month, the homeowner will still be responsible for paying taxes, homeowners association fees, homeowners insurance and other costs associated with homeownership. If a homeowner fails to make these payments, it may result in a default, which means the immediate repayment of the reverse mortgage.

Do Your Research

There are many resources available online to help people understand reverse mortgages.

The National Council on Aging and AARP have online resources to help explain reverse mortgages to potential borrowers.

The Federal Housing Authority, the Consumer Financial Protection Bureau, and other government agencies also offer information and online guides with information about reverse mortgages.

Talk to a Professional

Before getting a reverse mortgage, a potential borrower must attend a counseling session with a certified reverse mortgage counselor. This must be done before completing the application.

Lenders must provide a potential borrower with a list of several reverse mortgage counselors or agencies. It’s up to the client to choose a counselor and schedule a session. If the lender says you don’t have to attend a meeting or tries to steer you towards a specific counselor, that should be a red flag.

If you look on the HUD website, you’ll find a complete roster of certified HECM counselors.

Bring Your Family into the Conversation

Most lenders will say that the decision of whether or not, to take out a reverse mortgage should be made between the borrower and their reverse mortgage sales person. But, since this decision will affect the entire family, you may consider this to be a family decision.

A potential borrower should consider discussing their decision and how it may affect their heir’s inheritances and their estate. This should be done early in the reverse mortgage process.

Watch Out For – and Report – Scams

Reverse mortgage counselors and lenders try to watch out for clients who may be told to get a reverse mortgage as part of a scam. However, they are not able to catch all the fraudsters.

One scam involves people who offer seniors in a low-income community a “free” house. They move them into recently renovated fixer-uppers. Then they have them take out a reverse mortgage, and the scammer takes all the loan proceeds.

Other borrowers have been scammed when their house went into foreclosure. They were approached by an unscrupulous lawyer who promises to fix their problem for a fee. The lawyer disappears after the fee is paid.

If you suspect a scam, or if someone involved in your transaction is not following the law, tell your lender, loan office and reverse mortgage counselor. Also, file a complaint with your state Attorney General’s office, Federal Trade Commission, or the state’s banking regulatory agency.

Explore Other Options

Reverse mortgages are not perfect for everyone, so you should look for other options before you take this step.

First, look at refinancing the mortgage while interest rates are low in order to trim your payments.

If you have trouble making mortgage payments, you should research government programs in your area.

There are many different government programs that reduce your loan balance and make it affordable to stay in your home. These programs have various names depending on the state, like Florida’s Hardest-Hit Fund and Keep Your Home California. There are mortgage assistance programs available from some local governments.

And there’s a regular home equity loan which can help you get immediate cash, as long as you can handle another monthly payment.

Choosing The Best Mortgage Lender For Your Needs

Finding a mortgage lender isn't a difficult task: complete a few online forms for mortgage companies and you know all about the eager brokers who overload your voicemail with their pleas to make contact. Yet, going down this route is not your best bet. You are about to embark on the exciting journey to being a homeowner, pressure is the last thing you need right now.

Rather than get pushed into a corner, take your time and do your homework, make sure you understand how the rates and terms vary with different lenders, so that  when you do make a decision, it will be an educated one. The guide below will make sure that you feel just as good about your mortgage lender, as you do about your perfect new pad.

Understand Your Borrowing Needs

To rid yourself of a whole lot of hassle with mortgage lenders, get your side straight from the start. Have a clear statement of how much cash you can use for your new home and how much you need to borrow.

At the very minimum you are going to need savings equal to the down payment on the house (expect 20% of the house value, although at times it can be less). Then there is the closing costs, property tax for the first year and house insurance. Mortgage lenders typically like to see that you have a little extra in the piggy bank, in case you lose your job or run into some other financial crisis.

Check mortgage rates today.

The next step is to work out how much money you need to borrow - this step should be completed before you make contact with any mortgage lenders. To get things moving towards the goal you have in mind, you want to start any meetings with potential mortgage lenders in a confident and informed way.

It's Time To Ask Around

Has one of your friends or someone you work with just become a homeowner? Did they have a good experience with their chosen mortgage lender? If they did, it's time to ask for the contact details of the mortgage lender. (On the flip side, if they had a terrible experience you still want to write down the details, so that you can steer well clear!)

Another good source for information is your real estate agent or financial adviser. They are generally a good option for a reliable and trustworthy recommendation.

Do Your Homework, Cleverly

In the event that you haven't been able to get any recommendations, it's time to take a look at local and national lenders online. But, there is a problem with online mortgage quote generators; In one way they are handy, on the other side they are a bit of a pain. You enter all of your details to see whether you qualify and how much you can borrow and may think you're all done.

The problem is that once you've entered all of your personal details, you've put them in the hands of lenders. This means you can expect a whole lot of contact, granted that may be a good thing, but then again it may not.

Lenders buying and selling lists of potential mortgage borrowers is something the Federal Trade Commission has mentioned. It is a legal matter, but you can certainly get around it. You are able to request that your personal details are not given to lenders (known as opting out) by either calling 1-888-5-OPTOUT or online at www.optoutprescreen.com. Another option is to ask to go on a do-not-call list, this can be done via www.donotcall.gov and lasts for five years.

After completing both, or one, of the above steps, you can have peace of mind to do a few online searches for mortgages without worrying about an email, voicemail or call overload.

Another great idea is to use a mortgage rate comparison, like the one here, to give you a good base figure of how rates are looking in your area with the loan you require and your presumed credit score.

Calling banks or checking the bank or credit union's rate online is another excellent way to cleverly do your homework. Expect to be asked about the house value and how much you need to borrow. Once you've given these details they should be able to give you their interest rate.

In the event that the conversation starts to heat up with personal information being requested, all you need to do is state that this is simply a preliminary call, then politely round up the conversation. If the agent starts to pressure you, telling you the rate could change at any moment, they may not be the right lenders for you.  You want a combination of good terms, a great rate, and an exceptional attitude.

Whilst loan officers in banks, credit unions, and other such lending institutions are not slick sales people, they do want to coax you into applying for a loan with them.  Since it's clear that lenders want your business, you need to make them work for it. Say you would like a cost and fee breakdown - that should include commissions, appraisal fees, application fee and so forth. You'll soon see that there is a lot more involved than simply the interest rate.

Can any of these fees be included in the mortgage instead? Is your attractive interest rate dependent on paying points? (this is often 1% of the loan amount upfront, for each point).

How much is the down payment, if you do not have the entire 20% will you need to pay PMI (private mortgage insurance)? Once you build up the appropriate amount of equity will the PMI go away?

Also, your lender should be someone who makes you feel comfortable. Your preliminary meeting should not have even a hint of pressure whether by phone or in person. You should expect the lender to be approachable, as well as very informed. If you are talking with someone who you are happy to share your personal and confidential information with and they are offering you a great rate, it looks like you are with the potentially right lender.

Get It Down To A Shortlist

Don't feel pressure to run with the first lender you speak with, regardless of how well the meeting went. Zillow, a real estate website, gives the recommendation to find a minimum of three lenders who you think could be great. Then do more homework. Read reviews, look at forums and talk to your real estate agent.

At the end of the day, it is you that will be signing the bottom line, so your thoughts are the crucial ones. Zillow puts forward the suggestion of making a note on the following points following a one-on-one conversation with a potential lender:

- Was the lender quick about returning contact?

- Was the lender rushing through the conversation and trying to get you on board, or were they patient and pleasant?

- Was the lender knowledgeable as they answered your questions?

- Were you given details such as estimated costs, closing date, timeline and so forth?

- Did you find the lender was trustworthy when discussing rates and their potential to change?

It is clear that the right lender is friendly, efficient and capable. Finding these qualities in a lender may at first seem like a mission impossible, however, once you know the right steps to take, it's more than possible to make a great decision.

Where can You find the Best Mortgage Deals?

The market is open and while not as competitive as it was two or three years ago there are still some great mortgage deals in today's market conditions. Economic conditions are improving all the time and lending is beginning to take the steps to recovery so hopefully better mortgage deals are around the corner.

For now, if you have a mortgage and are looking to remortgage in the near future then don't just stick with your current mortgage provider. Search the market to find the best mortgage deals. If you are fixed into a mortgage at the moment the best time to start looking for the next mortgage deal is around three months. This will give you time to search the market and for your application to be processed which I believe generally takes around six weeks. This way  you aren't stuck with your current mortgage provider's standard rate which is often much higher that variable or fixed rate term deals. Many lenders will allow you to book a deal from them with no obligation to go ahead when your current deal ends so if you have found a mortgage deal you can book it and then if a better one emerges then you can go with that.

The big issue at the moment is the size of deposits needed to obtain mortgages at a decent rate as well as the size of the borrowing required in relation to your equity holding. Many mortgage providers will allow you to overpay on your mortgage which with interest rates so low then is something you should certainly do if possible. Why not pay the same amount to your mortgage that you were paying when rates were 6 and 7%. Usually, you can overpay by up to 10% of the outstanding loan each year so why not take advantage and get your loan repaid earlier. When you come to change in the future you will be in a much better position and the best deals on the market will be opened up to you.

The best mortgage deals can be summed up in two words - lowest rate! This is true in some regards, and if we left out the other side of the equation we would be wrong. Even though mortgage rates are the primary factor, there is a need to look at other factors.

Imagine for a moment you get the best rate, but the charges that come with it are very high. This could result in a more expensive form of finance, than if you simply went for a higher rate. The solutions for this we will look at in a bit.

For now, you likely wonder what are the ways to find the best mortgage deal? They are there and finding them is not that difficult.

For many people, though they will simply visit the bank they bank with, and from there find the package that the person at the bank suggests. This is a start, but we need something more, and that begins with a bit more research.

Research is the key here, and why not do it? Consider this: you go to the bank, and the bank offers you a certain rate. In most cases, this rate is the highest.

Finding lower rates begins with research. This can be done with advertisements on television, newspapers, magazines, and even online or radio. Taking time on research and learning more about mortgages will allow you to find the best mortgage deals.

Another way is to look online, and this can really be a fantastic way as you can find the best deals in a relatively short period of time.   Our mortgage listing is a great source for finding the best rates for all mortgage products offered in your area.  Check it out here.

Finding great mortgage deals begins with preparations done well in advance. Buying a home is commonly the biggest purchase any person will make in their lifetime. It is an involved process which takes a significant amount of time and energy. With careful preparation, the end result will be worth it because you will have gotten the best terms from all the available mortgage deals. What could you do to maximize your chances at qualifying for the most ideal of terms? Keep reading and you'll learn key tips which are effortless to do.

Check Your Credit

A high FICO score will permit you the negotiating power necessary to leverage a lower rate of interest. Make sure you present your FICO score in the best possible light by checking your credit history with all three of the major credit reporting agencies. This includes Experian, TransUnion, and Equifax. Verify that all data contained is accurate and updated. Commonly overlooked details which may deter your chances could be misspelled first, middle, and last names, old addresses listed as current, and paid accounts still identified as open.

Consult with Mortgage Brokers

Mortgage lenders will be happy to show you what they can offer. They're all competing for your business. So it's obviously important to shop around and compare which brokers will serve you best. You'll be able to weed out the offers that are out of your financial capabilities and have the chance to negotiate with those lenders that are closer to your mark. Don't be afraid to ask questions, no matter what. You'll be dealing with these people for the life of your loan, so building a good relationship from the get-go will make the process all the more tolerable.

Speak with Real Estate Agents

Talk to several agents, they'll be able to give you insider tips free of charge. They have the experience and the professional know-how to inform you of what to do and what to avoid. Mortgage deals are their bread and butter, they live and breath what you will do only but a few times in your life. Listen to them and ask questions. They are a wealth of information eager to share what they know, and they'll help you navigate the waters while avoiding most of the pitfalls.

Use Mortgage Comparison Tools

Going online will be one of the biggest moves you can make to find ideal mortgage deals. You'll be able to go to many Internet sites and avail of their free mortgage tools. Mortgage calculators, such as this one, can be used to forecast future payments. You'll be able to instantly see the effect of different interest rates on your monthly mortgage. You'll have to freedom of plugging in various changeable factors, like a down payment. Then you'll know right away what terms befit your current economic situation.  

Mortgage Refinancing Mistakes: 17 Tips to Help you Save When Refinancing

Choosing to refinance your mortgage can be a great decision and a fantastic way to save money – if you know what you’re doing! To help you save the most money possible, we put together a list of ways to make sure that you get the best deal when you refinance.

1. Be a Super Detective about Research. Nobody likes to do homework, but it’s important if you want to get the best deal. Rather than just calling your existing lender right off, take the time to understand your current credit score, find out the value of your home, and compare the rates of different lenders.

Click here to see what mortgage refinance rates we can find for you today.

2. Avoid New Debt! Lock up your credit cards and throw those new offers in the trash; when you apply for a refinance, your credit is going to be checked thoroughly not once but several times. If you start applying for new cards or running up high levels of debt, it will be noticed; your credit score will drop and your mortgage rates will go higher.

3. Work that Credit Score. The better your credit score, the greater your chances of a lower mortgage. If your score is below 600, it’s estimated that only two percent of lenders will be willing to work with you.

4. Don’t Be Afraid to Check out Other Lenders. Sure, you may like your current lender, but that’s no reason not to shop around for other options. You maybe surprised to discover that other rates are lower! Don’t forget to check not only the interest rate but also the loan fees associated.

5. Get it in Writing! When you go for quotes, make sure that you get prices in writing. Otherwise, there is no proof that you were offered that deal. Having some quotes in writing may also help you to get a better deal with your existing lender when they see that you’re serious about taking a different deal.

6. Take Everything into Consideration. Revisit your current mortgage and make sure that there is no early pay-off penalty; you don’t want to end up fined for trying to get your loan paid early! Also, figure if the closing costs of refinancing are truly worth the time that you have left to pay your mortgage.

7. Notice Key Ratios. There are two ratios to consider when refinancing your home: Loan-to-value ratio and debt-to-income ratio. Loan-to-value or LTV ratio is the percent of the money that you are borrowing against your home’s value. The higher your LTV, the more likely it is that you will have to purchase mortgage insurance which can be costly in the end. The debt-to-income ratio or DTI is your ability to pay your debts displayed in a percentage. If your DTI is high, you may have a difficult time refinancing.

8. Be Sure to Lock Your Rates! Sure, rates are likely to go down but they are also likely to shoot up. If you don’t lock your rates, then you’re making a gamble that could cost you big time. Rather than taking the risk, choose to lock your rate. Most often rates are locked for one or two months at a time. Since extended rate locks cost some money, be sure to submit all your required documents as soon as possible.

9. Expect Some Problems. Refinancing isn’t always a walk in the park. In fact, depending on your credit, income, and documentation, it may actually be a rough and unpleasant road to travel. Since mistakes happen, realize that you do have a rescission period, which means that you have the right to cancel your deal three business days after signing. If you choose to go this route, you will need to send a letter stating your intention to cancel through registered mail and include a return receipt.

10. View the Broad Picture – Not Just the Interest Rate. When people refinance, the first thing they want to look at is the interest rate. Of course, since the interest rate is the main factor this makes sense, but it’s only a part of the broad picture. Depending on your lender, they may try to sucker you into paying astronomically high closing fees by distracting you with a low-interest rate. Before you apply for the loan, look over the entire deal as a whole and ask questions about things like fees, points, and credit reports. While the loan isn’t secure until you have the God Faith Estimate in hand, it’s a red flag if the price starts bouncing around. If you have a hard time comparing everything, ask your lender to quote the price of a packaged “no cost” refinance, which means that all the fees are bundled into the loan. Although you may not want to do your loan this way, it still gives you a good overview of the price as a whole.

11. Examine All Documentation. There’s a reason that refinancing comes with so much paperwork and, while many people may choose to simply glance and sign, they maybe doing themselves a serious disservice. The Good Faith Estimate is a breakdown of what your new mortgage will mean and includes the interest rate and all fees. Compare what you had calculated against the Good Faith Estimate that you are offered. If you are paying more than you expected, it maybe time to move to a different lender. Watch out for hidden fees and match everything you pay against the Good Faith Estimate.

12. Know Your Break-Even Point. Refinancing a mortgage is not free; in some cases, the costs of fees and applications can reach as much as five-grand. The break-even point is the time when you have paid off the cost of refinancing and are actually able to start saving money. If you have to pay five thousand on the refinance itself and save $150 each month, it will take you over 33-months to reach your break-even point. If you have any plans to sell before you reach the break-even point, then refinancing is actually going to be a loss rather than a gain.

13. Don’t Miss the Boat Waiting on Something Better! Right now, mortgage interest rates are super low, making it the perfect time to refinance; however, some people may miss their opportunity entirely by waiting on it to get better. Rather than trying to play the market and time the mortgage rates for the lowest possible, you will probably do best to simply jump on board and enjoy what’s available while it’s here. It would be a shame to hold out on lower rates only to see them skyrocket.

14. Don’t Go for Too Much Home Equity. Refinancing gives homeowners the opportunity to take money out of their home, which basically means that they get a loan with their house as collateral. This is a fantastic way to gain enough money for some minor home repairs or household purchases; however, this is not a fool-proof way to pad your pocket. If you take out too much equity, you may find yourself in big trouble if the house market drops or your family is hit by financial problems. Before taking out equity, consider how much money you truly need – not how much you want!

15. Understand What a Longer Loan Period Means. When you refinance, you’re not just changing around some numbers; instead, you’re taking out a brand new loan. So, if your monthly payments seem drastically lower than usual, it may not be because you’re getting a fantastic deal but simply because you’ve got the more additional years worth of payments due. In some cases, lower monthly payments are worth any extra cost in the long run; however, if you truly want to save money, take the time to consider how much the refinance is going to cost in the end. If your new loan is going to have you spending tons more than your original over a longer period of time, it may not be worth it. The best way to save money is to simply refinance your loan into the same period of time that you have remaining on your current mortgage.

16. Be Wary of Prepayment Penalties. Sometimes lenders may push you to agree to a prepayment penalty. While this may help to lower the interest rate on your mortgage, it also means that you can’t pay off for several years. Although most people don’t refinance if they’re planning to sell, this is still something to consider. If there is any chance that you will want to sell or refinance again in the next three to four years, this is an option to avoid. Also, watch out for any prepayment penalties that will still be around after the regular four-year-period.

17. Keep Your Eyes Open for “Junk Fees”. No matter how sweet your lender seems, chances are that they may try to throw some additional fees onto your mortgage. Some fees such as application, title, and origination fees are to be expected but look out for strange additions such as charges for delivering the documents, preparing them, or getting credit reports. If you’re getting fined for a service that you could have done at home in your pajamas with no cost, there’s no reason to be paying your lender for the same work.

Refinancing is a great opportunity to save money on your mortgage. By using the tips listed above, you can rest assured that you will get the best deal possible and won't be hit with any unpleasant surprises!