Arizona homeowners can obtain AZ refinance to reduce monthly home loan installments. Prior to applying for mortgage refinance, borrowers should review the Truth in Lending statement attached to their mortgage note to determine if prepayment penalties exist.
AZ refinance can offer mortgage relief over the duration of the loan, but can cost borrowers money to initiate. Most home loans include prepayment penalties for paying loans off early. Mortgage prepayment penalties can be assessed during the first five years of the loan, while others assess a gradually reduced fee over the duration of the loan.
Not all Arizona home mortgage loans include prepayment penalties. VA and FHA loans are exempt from penalties for paying loans off early, as are home loans obtained through chartered credit unions. AZ homeowners uncertain about mortgage loan terms should contact their lender to discuss available options.
When prepayment penalties exist they typically range between 2- and 4-percent of the loan value. Homeowners must also account for additional refinance rates including loan application fees, home inspections and appraisals, legal fees, and settlement costs.
AZ mortgage refinance fees can easily amount to several thousand dollars. However, obtaining a reduced interest rate of 2-percent or more can reduce monthly installments. Initial refinancing costs can be absorbed within a matter of months to a few years; allowing borrowers to save thousands of dollars over the term of the loan.
Arizona homeowners should take time to conduct research, comparison shop mortgage lenders, and calculate AZ refinance costs. Many homeowners refinance mortgages through their current lender, but this may not yield the highest savings.
Mortgage financiers recommend that homeowners have a minimum of 5-percent home equity before considering mortgage refinance. Arizona residents should review their credit report and FICO score prior to applying for home loan refinancing. In order to obtain the lowest interest rate borrowers will need a FICO score of 720 or higher.
Each time homeowners submit a loan application a ‘hard inquiry’ is added to their credit report. Too many hard inquiries can result in lower credit scores. Borrowers should determine which mortgage lender they want to obtain AZ refinancing with instead of submitting applications to three or four lenders.
Mortgage providers are required to provide borrowers with a ‘Good Faith Estimate’ outlining anticipated refinancing fees. Good faith estimates do not include fees incurred by third party providers such as property inspections and appraisals. Borrowers will need to guesstimate additional costs, but lenders should be able to provide ballpark figures of common refinance fees.
One trusted source for comparing mortgage loans is BankRate.com. Homeowners can locate Arizona and nationwide lenders, as well as compare interest and refinance rates. BankRate.com offers mortgage refinance calculators which allow borrowers to enter their current mortgage payment, interest rate, number of payments made, or number of payments owed.
AZ refinance might be a good option for borrowers who originally obtained bad credit mortgage loans. Bad credit loans are charged a much higher rate of interest than prime bank loans and can add thousands of dollars to the loan amount. Once bad credit borrowers clear derogatory credit and improve credit scores they can refinance into a mortgage with a lower rate of interest.
While it is true AZ refinance can reduce mortgage payments, this financing option can be expensive. Borrowers must take time to learn about mortgage refi options to determine if this option is in their best financial interest. As with most important issues in life, education is the key to achieving success. If necessary consult with a real estate attorney or mortgage specialist to walk you through the process.