Refinance Mortgage Rates

Case Study: An Excellent Refinance

July 20, 2007 on 1:27 pm | In Refinancing |

There are a number of different case studies around the internet today regarding what refinances are currently available on the market and indeed if you look at a lot of them, they do offer some good insights onto the different kinds of refinances that a person can get in today’s markets. The important thing to consider however when it comes right down to it is whether or not the case studies that people have done determined specifically what an excellence refinance is. Of course, the term ‘excellent’ in refinance terms is something that is largely subjective because it depends on how close you get to what you want. Still, in relative terms, this article discusses what an excellent refinance might look like.

Interest Rates

For the vast majority of people, looking at interest rates is something that people don’t really do when it comes to a refinance. While some people might refinance partially to get either a variable or a fixed rate interest rate for their specific home loan, most people will do it for other reasons. Therefore, a good refinance from an interest rate point of view could be considered one where the interest rate itself doesn’t change. Either that or accomplishing the change from variable to fixed or fixed to variable would be the two most common definitions of an excellence refinance vis-à-vis interest rates.

Fees

The number of different fees available for the refinances is basically just going to be the same fees you had with your previous agreement. Just like with interest rates, most people that are going into the refinancing frame of mind are not really looking to reduce the fees that they get. If this sounds like you, then your goal should be to keep the fees consistent. If you have to agree to higher fees in some areas, you need to make sure it is balanced out by something that you specifically want that the bank does not want to give you. Fees ultimately should not affect your decisions too much since the vast majority of home loan fees are only triggered by you doing something that you really shouldn’t be doing anyway (such as making a payment late), but it is still important that you are aware of what will happen in those cases.

Term Lengths

Now we come to the part of the refinance itself that is the most important. The term lengths, perhaps the least important part of the mortgages and home equity loans, are perhaps the most important part of the refinances. This is because term lengths are the primary thing to be changed in a refinance because term lengths are the main determining factor of what exactly you pay back on the loan each month. If you are looking to get the term length increased and lower your monthly payment, then you need to push to get that term length increased as long as possible to have an excellent refinance. If you are looking to get the term length decreased, then you need to push to get the monthly payment up to the maximum level you can afford so that the refinance is as short as possible.