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Getting a refinance on your mortgage is common practice nowadays due to the drop in interest rates and the receptiveness of borrowers toward the idea of refinancing. Although many have vouched for its benefits, house owners should evaluate their personal preferences, financial standing, and current mortgage status and compare these with the various options available before planning their next move.

There are many facts surrounding the concept of refinancing and this article will provide you with an insight of important aspects which you need to know in order to make an informed decision. Refinancing your mortgage is for the long-term and thus needs to be a choice that is thoroughly considered.

1. Penalty Costs
The process of refinancing basically means paying off your current mortgage and obtaining another mortgage at a different interest rate (usually at an adjustable rate) and loan term. This causes penalty costs to be imposed on your current mortgage by your current lender, as you have opted to pay off your loan earlier than agreed upon. Occasionally, depending on the status of your current loan, penalties incurred may be higher than the cost savings obtained from refinancing your mortgage, therefore making the idea of refinancing no longer attractive.

2. Savings on monthly repayments
When you refinance your mortgage, you may most likely switch to a new mortgage structure that will benefit you in the long run, especially with lower monthly repayments. With the availability of Adjustable Rate Mortgages, interests incurred are relatively lower than the traditional Fixed Rate Mortgages, which has been incentive enough for home owners to switch their mortgage loan plans. However, although interest rates may seem to be lower at first glance, home buyers should practice due diligence in tabulating the actual amounts paid over the long term in comparison with their current mortgage repayments.

3. Transactions costs
As with any mortgage transactions, a refinancing exercise will involve transaction costs such as attorney fees, points, appraisal fees, inspection fees and prepayment penalties. All these hike up the cost of refinancing, which need to be balanced out with the cost savings obtained from switching loans in the first place. As a rule of thumb, if you plan to stay in your current property for the long-term, transaction costs will be offset with savings in repayment amounts over the long-run. Therefore, refinancing will then be a good option for you.

4. Tax deduction possible
Refinancing may help you regain tax deductions on interest if you have already used up your allocated amount for tax deductions. Therefore, with a new mortgage, you will be able to deduct interests paid from your taxable income, thus helping to reduce your taxes payable.

5. Get cash out of your equity
Read full article 7 Facts on Mortgage Refinancing or on the oficial blog: Mortgage Refinancing

What experience does your construction loan officer have and does it matter?

When it comes to money it’s amazing how tightly any loan officer becomes an instant expert at construction loans. You must keep in mind that all loan officers are salespeople. Yes, I be versed they have fancy titles like loan officer or vice president but the title is nothing but a fancy name for loan sales-clerk.

Loan salespeople usually have one main goal in mind when helping you with your loan request and that is the commission. By the way, the guess name for commission in the loan business is called a loan fee, points or yield spread premium (YSP).

Now don’t get me unsuitable, there are a lot of good honest sales people (loan officers) that work very hard at providing you the best usefulness and rates. What’s important is distinguishing the good from the bad.

The following questions allow you to quickly find out if your loan lawman is experienced at construction loans.

1. How long have you been doing construction loans? 5 years or more is to the fullest extent.

2. What is the loan to cost (LTC) required for construction loans? This is cash equity such as down payment on land. This can extent from 5 to 20%.

3. What is better? The voucher or draw disbursement system and why? Draw is now the most popular because the customer has the control of the money.

If the credit officer (sales person) can answer these questions with no problem then they have passed a pretty good litmus prove.

If you really want to throw a curve at them, ask the loan officer if they have ever built a home themselves and what type of construction advance did they get.

If you find a loan officer that has gone through the experience of building a home themselves then the odds are you have found an experienced loan public servant.

Read full article: inside secrets to building your new home

Source: Construction loan: inside secrets to building your new home