Your Mortgage Refinance Rates Questions Answered

Your Mortgage Refinance Rates Questions Answered

Times are tough at the moment and specifically they are tough in terms of finances. This is not only true for governments and businesses but for everyday people like ourselves. Many of use have all sorts of loans whether it be for houses or cars or even what we owe on our credit cards. It all adds up and in these times it can get difficult to know who to pay and when.

One answer to all these problems is something called debt consolidation. This is where you combine all of your debts into one big one and end up with paying only one repayment. When it comes to mortgages, it is a very similar process. If you already have a mortgage as well as a number of other debts and are thinking about refinancing, then it is a good opportunity to bundle them all up. You will only have to pay one debt once a month and may end up with better terms than your existing loan.

Another piece to the refinancing puzzle is a very important thing – interest rates. Interest rates are usually not so bad when the economy is not doing so well. This is because more people are likely to borrow when interest rates are lower and is exactly what the economists want – to make people spend money so that this in turn stimulates the economy.

You may have a mortgage at 5% for example but a credit card with an interest rate of 17% and a personal loan with a rate of 9%. If you put them all together and refinance it as a mortgage then you will be paying 5% on the lot. Sometimes you have gotten yourself into a mortgage where the interest rate is higher than the market rate and you want to get it lower. This is another reason to refinance.

If there are other mortgage providers that have a much lower interest rate than the one you have currently, then it is time to consider refinancing.

Mortgage refinance interest rates play a big part in refinancing but you must also be aware of penalty rates and exit fees. If you leave to early within your loan period, your existing provider may charge you a large fee and it may be better to stay with them after all. This is because the amount you would save with the new interest rate is not as high as the fee you have to pay to get out of your existing loan.

There are many things to consider before you take the plunge to refinance. Make sure you do a lot of homework first.

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