Remortgage Tips

Let me start by given you the definition of remortgage. It means to get a new mortgage, usually from and new mortgage company (but not always) that replaces you current mortgage, also know as refinancing.

Why would someone want to Remortgage? There are many different reasons for wanting to remortgage, here are a few of them.

Lower interest rate, this is where your current loan is at a higher rate lets say 7% and the current rates are at 5% and you get a new mortgage at the lower rate to save money on interest.

Lower monthly payment, sometimes when you get a lower interest rate you also get a lower monthly payment, but that is not always true, there is alot of different factors that play into whether your payment will be lower or not.

Remove someone off the current loan, lets say you are married and you got a divorce and you want your name off the loan because your spouse got the house, your spouse can get remortgage in just there name and you will no longer be responsible for the loan on the house that you no longer live in.

Change the length of the loan, you may have a 30 year loan and you would like to make it a 15 year so you could remortgage to change the length of time it will take to pay off your house.

Change the terms of your loan, lets say you currently have a adjustable rate mortgage and your payments keep going up and they are getting out of control, you may want to remortgage in order to get a fixed rate mortgage.

Those are just some of the reasons to remortgage.

To remortgage or not, is more complicated than you think. Just because you see in the news that the interest rates went down doesn't mean it is the right time for you to remortgage, there are alot of factors to look at before jumping into a new mortgage.

Here are a few things to think about before remortgaging.

How long are you go to live in the house, lets say you only plan on staying in the house another 3 years, the cost of remortgaging may be more than the savings you get on your payment, so it will end up costing you more in the end.

The terms of your current loan, do you have favorable terms now? lets say you have a fixed rate mortgage and it may be higher than the current rate, but you don't have a prepayment penalty and it doesn't have mortgage insurance with it. You might be better off keeping your current loan.

Mortgage Insurance, do you currently have mortgage insurance? If you remortgage you may have to get mortgage insurance on the new loan, if the loan to value is to high and it is a fha type loan.

Prepayment penalty, do you have a prepayment penalty now? if not it may be less expensive for you to keep your current loan if you don't plan on staying in the house very long, because your new loan may have a prepayment penalty.

Depreciating home values, if your home value has gone down your new appraisal may not be high enough to get favorable terms.

Your credit score, with the market in such bad shape, it is harder to get a good loan. If your credit has a few dings on it and your score went down a few points, you are more than likely going to get a less than favorable interest rate and terms.

Most mortgage companies are going to want to do your loan, but they don't really care if its going to cost you more in the end, so you are going to have to do some home work to find the right mortgage broker

The first thing I would do is ask your mortgage broker if they can go over your current loan with you to determine what your loan is really costing you. If he doesn't want to do this for you then find a different mortgage broker.

You want him to show you what it would cost if you keep it for the life of the loan and what it would cost if you sold the house in a few years (the length of time you think you are going to stay there) or if you plan on a big purchase (remodeling, or debt consolidation, etc.) were you will be refinancing again in a few years.

Once you have your current loans information then your mortgage broker can find you the best mortgage deals they can. Then get back together with them and go over the mortgage quotes, have them add everything up like they did when they went over your current loan to see if a remortgage would make sense.

Make sure they add in all the closing costs involved with the remortgage process, like points, escrow fees, origination fees, appraisal fees, mortgage insurance, home owners insurance, taxes etc. You want to know exactly what is going to cost you before you do it.

Hope this information helps you make the right decision, Good Luck.

A remortgage calculator is a great tool to use to help you figure out your estimate monthly mortgage payment.

In order to get a good estimated monthly mortgage payment the remortgage calculator must have several different fields of information that it needs to take into account.

Here is some of the criteria that your remortgage calculator should take into account before calculating your monthly payment.

Purchase price- The price you paid for the home (if its a new purchase) or your new projected loan amount (if its a remortgage).

Down payment- The amount you are willing or required to put down (if its a new purchase).

Term- Is how many years you plan on stretching your loan out. You probably are used to a 30 year term, but there are several other options.

Interest rate- The current market interest rate for a home loan. This can fluctuate depending on your credit history, loan product, down payment etc.

Tax- This is the yearly property tax amount on the property you are remortgaging.

Insurance- The cost of the properties insurance, including building replacement, liability, fire, flood and more, what ever policies you have on the home.

Some remortgage calculators have more or less criteria, In this case the more the better. The more information you can provide the calculator the more accurate your estimated monthly mortgage payments are going to be.