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Friday, February 13, 2009

Some Suggestions On Researching Refinance Companies

By Nick Svengali

The following are a few tips on researching good quality refinance lenders:

- Points And Fees. Points are the fees of the lenders, generally included in the interest rate. Research the current industry fees and points. Fees like refinance origination or underwriting fees, settlement, and closing costs. Remember most of these are negotiable. There are also 'no-cost' deals, but they naturally charge a higher rate of interest.

- Negotiate With the provider. Providers are competing for your business. Get a detailed list of fees including the interest rate, points, closing costs and any refinancing fees. You may be able to get some fees lowered or waived, even if you have lousy credit.

- Be sure that there is no prepayment penalty associated with the refinance. If there is such a clause, get hold of your broker to discuss your options. Your loan is a package comprised of interest rates, fees, points, prepayment penalty clauses and balloon payment clauses. Be sure you grasp the language used. Know and comprehend your fees. Your refinance fees may include an application fee, points, appraisal fees, etc. If you are dealing with a respected provider most of these fees will be nominal.

- Is your goal to lower the monthly payment or to pay less interest? A lower interest rate can be translated into the same month payment, but with more of the payment being applied to the principal of the finance. This, of course, helps you pay the debt faster.

- Do your research: As in all other sectors, there is intense competition in lending. You might try for a refinance loan from your current broker, but they may not necessarily offer you the best offer.

- Up to approximately 30 to 35 per-cent of your credit score is determined by your payment history. If you miss just one month's payment, it can drop you 100 points. That 100 points could be the reason why you get that better interest rate on your finance. Your credit rating and score is made up of your demonstrated ability to pay off all your bills on time.

- Create a list of all your debts and the interest rates for each one. Utilize your house equity to get money back at closing. This extra money that you borrow may have a lower interest rate than some of your current debts. Employ the extra money to pay back high-interest debts and help cut down their periodical payments.

- Be mistrustful of 'free' application expenses. In terms of refinance, 'free' can come with a cost. Instead of focusing on looking for applications offered at zero cost, focus on the interest rates and points. You may get a shock when big fees smack you right before closing. Getting info about the periodical payment rate alone is not enough. Find out about the total refinance amount, terms and conditions, and type of finance that is being offered. This information will assistance you more accurately compare loans provided by different firms.

- Close credit accounts. The number of tradelines (accounts) that you have open is a determining factor in your credit score. Keep your oldest credit or charge card, for the credit history tied to it. Your credit card lender sends out a report once a month to the credit bureaux on your undischarged balance. By having a modest balance, or none at all, you are demonstrating you are financially responsible. This will improve your score.

I hope these few simple suggestions will be of some use to you in researching good quality refinance lenders.

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