Sunday, May 27, 2007

Mortgage Refinancing Can Give You a Lower Monthly Payment

If you are a homeowner in need of a lower mortgage payment, refinancing could help meet your financial needs. There are however a number of pitfalls that result in overpaying and will prevent you from realizing any savings. Here are several tips to help you avoid overpaying for your new loan when mortgage refinancing.

There are two basic ways mortgage refinancing can lower your payment amount. The most common and ideal way of lowering your payment is to qualify for a lower mortgage interest rate. If you are unable to qualify for a lower mortgage rate you can still lower your payment by extending the term length of your loan. We’ll talk about term length; however, there are a few things about qualifying for a lower mortgage rate you might not be familiar with.

Most homeowners think the mortgage rate they receive is based on their credit score. While your credit score influences that rate, the actual interest rate you close on depends on how much the loan originator marks up your mortgage rate. Mortgage companies and brokers routinely mark up mortgage interest rates to get a bonus from the wholesale lender. The lender pays them one percent of your loan amount for every quarter percent you agree to overpay; this markup is called Yield Spread Premium.

If you’re considering mortgage refinancing for any reason, avoiding Yield Spread Premium needs to be your number one priority for the new loan. Homeowners who unknowingly agree to this markup pay thousands of dollars unnecessarily for their loans every year. Tell your loan representative that you understand how Yield Spread Premium works and will not tolerate the markup. Negotiate to pay a reasonable fee for the origination, not more than 1-1.5%, and all necessary third party closing costs. You can learn more about this negotiation with a free refinancing tutorial.

What if you cannot qualify for a lower mortgage rate? Homeowners who cannot qualify for lower rates because of their credit or financial situation can still lower their payment amount by choosing a loan with a lower term length. You’ll still need to find a mortgage company that will not charge you Yield Spread Premium; however, by choosing a 30 or even a 40 year mortgage you will lower your payment amount by spreading the repayment over a longer period of time. To learn more about mortgage refinancing while avoiding costly mistakes, register a free mortgage tutorial.

To get your FREE six-part Mortgage Refinancing Tutorial, visit using the link below.

Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: "Mortgage Refinance - What You Need to Know," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit

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Mortgage Refinancing

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Obtaining the Best Mortgage Refinance Rates

Fixed rate or Adjustable? How should I refinance? Should I wait a bit to improve my credit score or refinance right away? These and more questions are what a consumer usually thinks about when considering refinancing his or her mortgage. Fact is that it doesn't have to be too complicated all you really need to know is how much you can pay per month and find the best lender.

Fixed or Adjustable what is better?

Depending on the period you would like your refinance repayment choose the type of rate. In general Adjustable Rates are better for short term and fixed rates are better for longer periods. If you can afford paying more money per month and want to pay your mortgage over a shorter period of time work with ARM. If you don't care about the duration of the repayment but do not want to pay a lot per month, refinancing to a fixed rate mortgage will be ideal for you. A FRM tends to be more expensive but much more flexible than an Adjustable Rate Mortgage.

Improve Credit Ratings before Refinancing Your Home Loan

Here is a tip! When borrowing money from a financial institution or lender where a credit check is necessary rule of the thumb is: The higher your credit score is the better interest rates you will be quoted. Always belong to the prime market. Being labeled as bad credit doesn't only sound bad, but, will be problematic when applying for a loan. Therefore, before refinancing pay your bills on time. After a few months your credit ratings will climb and you will find yourself belonging to the prime market.

Compare Online Lenders, Quotes and Options

The internet is a great place to find information, do research and find cost efficient offers. By comparing several online lenders you will immediately get a better picture of the market. This will help you reduce the chances of getting scammed and of course help you get the best mortgage refinance rate. Find online home mortgage lenders and don't forget to do research before applying for a loan.

Get information about refinancing a mortgage and find bad credit mortgage refinance tips at our site.

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