Refinancing a Home Mortgage Loan
Friday, May 8th, 2009Have you reached that point where your home mortgage is bringing you down? Then it may be time to get KY refinancing. It only makes sense to refinance because you can lower your interest rate and your monthly payment.
All you are really doing is taking that Louisville Kentucky mortgage and getting a new one that will pay off the existing loan. Be careful, you do not want the new loan to cost you more in interest or monthly payments so do your research carefully.
Many of the terms you will come across in refinancing are the same. If you do not recognize one, find out its definition! Some of the terms you will come across in your research are:
Loan to Value Ratio: This is usually up to 80% of the value of your home that you are borrowing against. Higher than 80% and you may be required to purchase mortgage insurance to refinance.
Points: Everybody has heard about points when it comes to real estate. However, there are two different types of points you can pay. There are discount points, paid upfront at closing and origin points or fees paid to the loan representative for services rendered. Discount points would usually lower your interest rate.
Fixed Rate Mortgage: The interest rate does not change for the life of the loan in this mortgage. The rate is fixed at closing time and will not change.
Adjustable Rate Mortgage (ARM): This mortgage has interest rate that will fluctuate up or down depending on the prime rate or treasury index that it is connected to. You do not want this type of mortgage! If the interest rates happened to go up, so does your monthly payment.
Annual Percentage Rate (APR): This is different from the fixed or adjustable rate. This number is based on the costs associated with the mortgage and is shown as an interest rate. It will vary from one lender to another because they each calculated it differently. Ask for the “Good Faith Estimate” that all lenders are required to provide.
Good Faith Estimate: This is a list of all the estimated costs connected with your loan. This should be provided to you within three days of filling out a loan application. All mortgage lenders are required by law to provide it to all applicants.
Term Length: This is the length of your loan in years. The majority of loans are 15-30 years in length. The longer the term the more you will pay in interest.
The mortgage rates Louisville are at an all-time low right now. That means that if your goal is to free up money for other uses, refinancing may be the best option for your mortgage. It can give you the money that you need and lower your monthly mortgage payment.