Baltimore Refinance Guide

Considering more than one home loan or mortgage offers will assist you in obtaining the best financing arrangement. A mortgage, whether you are buying a new home or getting a refinancing, is considered a product that you can negotiate the cost and terms of agreement in the contract. It would be wise to evaluate the prices involved when trying to secure a mortgage. Getting useful information and considering the different costs can save you a lot of money.

You can consider getting a home loan from several lending institutions. There are the banks, mortgage companies, and other credit institutions. With different lenders come different costs so get in touch with more than one lender to ascertain that you land on the best deal possible. When you don’t want to go through the whole process alone, you can secure a mortgage through a mortgage broker. Mortgage brokers will organize the transactions between you and the lending company. In short, they will find the most suitable lender for you.

A knowledgeable broker has unlimited access to a number of lending institutions and this will give you the benefit of having a wide array of loan products and agreements to choose from. It is the job of a broker to communicate with several lenders concerning your loan application. But first, you need to sign a formal agreement which gives your broker the power to represent you as your agent. Only then will he be able to do his job to the fullest and find deals that are advantageous to your interest. Just like choosing a lending institution, you should also approach more than one broker so you know which one can give you the best services.

There are lending companies that function both as lender and broker all at once. Most brokers who run ads about their services don’t usually employ the term “broker”. To be certain, ask the lending company you are interested in if a broker is part of the deal. This piece of knowledge is important because once a broker is involve, there will be fees that must be paid for the services rendered aside from the fees that you are going to pay the lending institution. If you want to employ a broker, make sure that you ask how much he would charge and decide whether it is right for you.

Home refinancing is very popular these days because of a number of reasons. There are many advantages a homeowner can reap in refinancing. This includes being able to decrease the monthly payment he has to pay when he is able to secure a cheaper fixed rate. He can also opt to modify his adjustable rate mortgage to the more affordable fixed rate loan. Another benefit is that, he can choose to lower his interest rate in case he has originally secured a high-cost mortgage and by refinancing his home, he would also be able to gain extra money from his investment.

 

Last year, mortgage rates had dropped significantly to a record low. So if you are considering refinancing your home, now is a good time to lock-in your rate. It is good to remember that mortgage refinance rates have bigger chances of escalating rather than declining. So make sure that you have weighed all angles carefully before you postpone a rate lock, especially if you have already been approved for a pre-qualification for a refinancing loan that would enable you to save valuable money in the end.

 

Since mortgage refinancing rates have demonstrated a major decline, there’s no better time than now to think about switching to fixed-rate mortgage especially if the rate of your mortgage is adjustable. An ARM or adjustable mortgage rate has all the possibilities of increasing in the future than the existing fixed rate mortgages. But before doing any move to refinance your home, think about how long you are going to stay in your home. If you are going to live there for seven more years, then it would be advisable to switch to a fixed-rate mortgage.

 

Another option open to homeowners is to take out a cash-out refinancing. This allows them to acquire a new financing by applying for a second mortgage for more than the original amount secured. This is especially useful when you have build-up enough equity to pay off your current home loan. You will also be able to use your equity for other expenses such as making home renovation, debt consolidation, or spending on a vacation that is long overdue.

Everywhere you turn you can read about the fact that Baltimore mortgage rates are at historic lows and that now is a great time to refinance. And with all the effort that has gone into creating programs to try to help struggling homeowners, it would be worth talking to your mortgage lender even if you think you might not be in a position for a Baltimore refinance right now. You never know, one of these programs might be just the thing for your existing situation.

Once you’ve established that you can do a Baltimore refinance, and that it makes sense for you to do so right now, the next question will be; what to do with the savings you’ll be getting. While that might sound ridiculous, if you don’t make a plan for what to do with that extra cash, it will just ‘disappear’ into your day to day expenses and will never have the kind of impact on your life that it could.

In previous articles two different suggestions were made for what someone might want to do with their new found savings. In all examples we used a hypothetical monthly savings of $175 with your new mortgage. While that amount of savings is pretty good, it’s probably not enough to make many people overly excited. However, with a bit of disciplined effort applied to that money, we showed how it could turn into something that you can excited about.

In our first example applied the money to pay off existing credit card debts. For our example we used two cards with interest rates of 12% and 16% carrying balances of $4000 and $8000 respectively. In that example we applied the $175 per month to the minimum payments and reduced the pay back period from 23 years to just over 4 years.

In example number 2 we took the savings and applied it towards the principle on your Baltimore mortgage to help pay it off more quickly. Our example used a fixed rate of 5% for 30 years on a $225,000 loan. When we applied the $175 per month savings to the principle, we shaved over seven years off the mortgage and paid it off in just under 23 years rather than 30. What does that add up to for you? Over $58,000 in savings.

Our third option would be for you to invest that money each month. The investment goals could be anything from your retirement to a vacation to a child or grand child’s college expenses. The reason is totally up to you, we just want to show you what you might be able to accomplish with this ‘modest’ monthly contribution.

In trying to predict what kind of return you might get from an investment, we have to make some guesses. We’ll use conservative numbers to be safe.

Let’s say that you start of with $2000 in an investment account and you’re going to add that $175 to it each month for the next 18 years (working on a college fund for a new baby). We’re going to use a conservative annual rate of return of 7% for this example.

At the end of 18 years you would have accumulated over $83,000! That’s a pretty good start for college, I would say.

Now let’s look at a different person; a 30 year old who has plans to retire when they turn 65. Let’s also say that this account is starting with ZERO balance, but gets the $175 every month, compounding at a conservative rate of 7% annually. Given this situation, if you did nothing else for your retirement, by the time you were 65 years old this account would have over $300,000 in it. Again, not too bad.

You need to remember of course that these figures are all hypothetical. If these numbers have got you thinking though, you really owe it to yourself to discuss it in more detail with a Baltimore mortgage lender as well as an accountant and/or a financial planner.

The main take-away here is that while savings may seem like ‘small change’ at first, if you can be disciplined enough to apply those savings to a PLAN, you can have a major impact on your overall financial picture. The mortgage on your Baltimore home loan is really just a part of your bigger, overall long term financial plan.