| If you are a homeowner presently paying a fixed rate | | | | as to increase their total earnings. For this reason if |
| mortgage and when interest rates fall, you would be | | | | your refinancing mortgage loan is short term, lenders |
| very much tempted to do refinancing mortgage loans. | | | | usually will charge prepayment penalty for your |
| Unfortunately most people get into a mad rush, | | | | mortgage loan. It is important to read the agreement |
| attracted only by the lower interest rates without | | | | carefully to confirm if there are any such penalties |
| considering the bigger picture. Here are some | | | | imposed. |
| important tips that you should consider: | | | | Some Disadvantageous to Refinancing |
| What Is A Refinance? | | | | Costs |
| A refinance loan is a new loan that is taken up by the | | | | If you are required to pay upfront fees to obtain the |
| borrower primarily to pay off the original loan. | | | | refinancing loan you should calculate to find out if taking |
| Tips To Consider when you refinance a mortgage | | | | the new loan is a good decision for your financial |
| loan | | | | appetite. Even with reduced monthly interest due to |
| 1. Before you consider switching out a fixed-rate | | | | your new loan structure, these fees may make you |
| mortgage for another type, make sure you completely | | | | financially worse off than had you not taken the new |
| understand the terms of the new loan. Some of the | | | | loan. |
| most important information affecting your decisions is | | | | Extended Loan Life |
| found in the fine prints of your contract. | | | | You may have the option to shorten your loan tenor |
| 2. If your current mortgage loan is a long tenor loan e.g. | | | | as you wish, but do take note that you may not |
| 20 years, you may wish to consider if it is possible to | | | | necessarily get an increased loan payment from your |
| have it restructured to a shorter loan instead e.g. 15 | | | | new refinancing loan. This could result in you having to |
| years. Taking off 5 years loan commitment can be | | | | pay more monthly interest amount should you decide |
| good thing even if it means having to pay higher | | | | to shorten you loan repayment months. Also only you |
| monthly interest. | | | | yourself can decide if you are financially capable to |
| 3. Lenders prefer to structure your loans long term so | | | | handle an increased monthly payment. |