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Should I Refinance my Michigan Mortgage?

By: James Mucci

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There are many purposes that people may look to refinance their Michigan mortgage. Probably the most common is to benefit from reduced interest rates. Some of the other explanations why people refinance their Michigan mortgage is to pay off more costly credit cards, make home improvements, and lock in an adjustable rate before their payments go up.
What is necessary when consumers seek to refinance their Michigan mortgage? When you refinance you generally 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.
People who refinance their Michigan mortgage should have a look at several things before doing so. Search for a company that may be inclined to reduce the normal costs. These may include such costs as an application fee, legal fees, processing fees, and underwriting fees. These costs are all generally caused by closing fees on a new mortgage. This could save you thousands. It may give you a nominally higher monthly payment but this could still provide considerable savings, or benefits, with a minor rate change.
How long do you plan on keeping the mortgage? If the answer is 12 months or less, then you should probably not refinance your Michigan mortgage, because your savings will in all likelihood not outweigh the costs. In fact you should assess your break-even point or consult your Michigan mortgage advisor to aid you with this analysis.
What are the latest rates? As a rule of thumb try and find a rate that is minimum 1 percent below your present mortgage rate. If you have a higher loan amount, and you are intending to live in your home for a long time, then it may still make sense to complete your Michigan refinance even if you are not meeting this rule of thumb.
A number of people who refinance their Michigan mortgage do so with the motive of building 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 larger even though you have a lower rate. The benefit is you build equity quicker and pay less interest over the term 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 trying to find a Michigan mortgage company to refinance your home. Make sure you understand the interest rate lock-in procedure, and try and get a guarantee on the rate so that it is locked in during the processing of your home loan. This will keep the rate the same even if it the market rates should go up prior to your closing. Each company has various procedures, so it’s best to ask about the rate lock process ahead of time, so that when you go to close your Michigan mortgage refinance, you are not shocked with a higher than expected interest rate. The overall 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 Mortgage Rates Copyright 2010 All Rights Reserved.
Treeside Financial, LLC michiganmortgageadvisor.com

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