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Reasons to Refinance Your Michigan Mortgage

By: James Mucci

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There are several reasons that people may look to refinance their Michigan mortgage. Probably the most familiar is to take advantage of reduced interest rates. Some of the other explanations why people refinance their Michigan mortgage is to pay off more expensive credit cards, make home improvements, and lock in an adjustable rate before their payments go up.
What is involved when individuals look to refinance their Michigan mortgage? When you refinance you typically just pay off the old mortgage and sign a new mortgage. Now this will also mean you incur comparable costs you had when you signed the original purchase mortgage. Depending upon the stipulations of your original mortgage you may be required to pay a penalty for paying the mortgage note off early.
Individuals who refinance their Michigan mortgage should look at several things before doing so. Look for a company that may be ready and willing to waive the normal closing costs. These may include such costs as an application fee, legal fees, processing fees, and underwriting fees. These charges are all typically associated with closing fees on a new mortgage. This could save you . It may give you a nominally higher monthly payment but this could still provide significant savings, or benefits, with a small rate change.
How long do you plan on staying in your home? If the answer is 12 months or less, then you should probably not refinance your Michigan mortgage, because your savings will likely not exceed the closing costs. In fact you should evaluate your break-even point or seek advice from your Michigan mortgage advisor to aid you with this analysis.
What are the current rates? As a general rule try and find a rate that is minimum 1 percent below your existing mortgage rate. If you have a bigger loan amount, and you are planning to live in your home for a very long time, then it may still make sense to get your Michigan refinance even if you are not meeting this general rule.
Some individuals who refinance their Michigan mortgage do so with the motive of establishing equity in their home faster. This can often be realized by refinancing to a shorter term. Now with this type of loan your monthly expense will be greater even though you have a reduced rate. The advantage is you build equity sooner and pay less interest over the length of the mortgage. If you hoped to refinance a 30 year fixed rate mortgage to a 15 year fixed but the monthly payments were higher than you could handle you may want to check into a 20 year fixed mortgage to still be able to take advantage of the lower rates.
There is one last point to remember when seeking a Michigan mortgage company to refinance your home. Make sure you understand the interest rate lock-in process, and try and get a guarantee on the rate so that it is locked in during the processing of your loan. This will keep the rate the same even if it the market rates should go up prior to your closing. Each home loan lender has their own process, so it’s best to ask about the rate lock-in process in advance, so that when you go to close your Michigan mortgage refinance, you are not surprised with a higher than expected interest rate. The ultimate goal is to reduce your payments, reduce your total interest cost, or to increase the equity of your home at a faster pace.

Article Source: http://depositarticles.com/

About the Author: James P Mucci is the President and founder of Treeside Financial, LLC, a duly licensed Michigan mortgage broker and lender. He specializes in Michigan Refinancing and Michigan Purchase Mortgages Copyright 2010 All Rights Reserved.
Treeside Financial, LLC michiganmortgageadvisor.com

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