Discover Your Mortgage Rate Options

Next to the actual cost of your home, the loan's interest rate is one of the biggest factors in how much you pay, on a monthly basis, for your house. The internet makes finding out what the current rates are incredibly easy. You can do a simple search and come up with literally hundreds of companies with their rates out there for everyone to see. There are also a large number of mortgage calculators that can help you figure out what your monthly payments will be as well as the total amount of the mortgage.

Simply getting a new loan with a lower interest rate can lower your monthly payments by a substantial amount, and a change of as little as a couple of percentage points can save you hundreds of dollars per month. Take a look around the internet, talk to other folks you know who have a mortgage and discuss your mortgage options with a mortgage broker to find out how much of a difference it can really make.

Be wary, though. Keep in mind that a deal that seems too good to be true probably is. Even though you can save a lot of money by refinancing, you can also get yourself into trouble if you aren't paying attention to small details. There are still a lot of unscrupulous people out there who are determined to bilk people out of their hard earned money. Arm yourself with good information before you start seeking a new loan.

One of the first things you want to look at is your personal financial situation. Request reports from the credit monitoring agencies to make certain there aren't any problems. You should do this on a regular basis anyway, but you especially want to do this before changing what probably represents a large part of your financial "household." The better your credit worthiness is, the better rate you will get from any mortgage company you end up working with. Fix what problems you can before approaching a company or a broker for a new loan.

You'll also want to check into the current value of your home. Property values have fallen in most of the country over the past several years. Refinancing may not be a viable option if your real estate is now worth less than when you initially purchased it, or, even worse, if it is worth less than what you owe on it. In a lot of cases, especially if you are changing the company that holds your mortgage, an updated appraisal may be required.

Refresh your memory on your current mortgage. It is an unfortunate truth that many people do not read the mortgage paperwork when they sign for a home loan. Even if you read it at the time, it is not a bad idea to pull out the paperwork and look it over again. The primary item you want to check for is a prepayment penalty. Most banks want to make sure you pay for the privilege of using their money. Quite often, a bank will insert a prepayment clause that will require you to pay a fee or fine if you pay off that mortgage before a specific date. You'll want to factor in this potential fee to any numbers you are working out.

Once you make sure that you have all of your ducks in a row, it is time to check out the options that are out there. Again, the information on the internet can be incredibly valuable when it comes to finding the best deal for you. While a lot of this information can help you make an informed decision, it might not be a bad idea to work with a mortgage broker. A broker should have the most up-to-date information and may be aware of programs that are even better than those available online.

Regardless of how you select a mortgage company to work with, there are a few things you will want to check for in a new loan. First of all, there will be closing costs. These fees will probably be similar to the ones you paid when you got your first mortgage. You should keep in mind that, in a lot of cases, many of these fees could be negotiable. A bank does want you to get a loan from them and they will often be willing to cut some of their rates and fees to earn your business.

You'll also want to make certain that the interest rate you finally get is fixed. Make sure that the interest rate will not change in five years. In most cases, these changes benefit the bank and not you. Make sure to watch for any potential balloon payments, too. A large, bulk payment due ten years down the road can really hurt and even result in your losing your home if you cannot make the payment.

Leslie Silver is a freelance writer who offers suggestions about how to refinance mortgage rates.