Three Top Reasons Why People Do Mortgage Comparison

When doing a mortgage comparison, you might be looking at your current mortgage and one that it would be possible to get if you applied for a refinance.  People often do this every so often on their houses, depending on the market.  You are not as locked into that first mortgage as you may have thought.  Refinancing does take a bit of time, as the house has to be appraised and a lot of paperwork has to be done, but it can really be worth it if it changes the amount that you have to pay for your monthly bills.  The three top reasons why people do this are listed below.

“Don’t you think it’s time to refinance our mortgage?”.  Home Sweet Home by Stuck in Customs, on Flickr.  This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

1. They are willing to extend the mortgage in order to pay less.

Basically, if you signed a 30 year mortgage and paid down on it for ten years, you have taken away a significant amount of what you owed.  If the payments are now higher than you can afford – due to an expanding family, for example – you may want to lower them.  You can do this by getting a new 30 year mortgage on the smaller amount that you have left.  You end up paying for 40 years instead of 30, but you can make your home affordable.

2. The home’s value has changed significantly from what it was before.

You may also notice that your house is worth less than it was when you bought it.  You can in some cases – but not in all – take out a new mortgage based on the change.  You do not want to owe more than the home is really worth.  This is known as being “upside-down.”  A new mortgage can adjust things so that they make more sense in the current market.

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3. The interest rates have fallen a bit since they first signed up.

Finally, the interest rates could have moved since you bought your house.  If you got it at a rate of 7.9, for instance, and you are now seeing mortgages being given out for 4.25, you want a new deal that reflects the lower rate.  Mortgage lenders will be happy to buy out your loan from your current lender and give you a new one at the lower rates.  This saves you a little money every month, but it can save you quite a bit when you think about the full term.

The main advantage of comparing the mortgage rates is that you could always find a better deal.  There are now many companies who are able to lend their money to you with interest in return.  Since the terms of each one mortgage companies tend to be varied, you can evaluate which would suit your financial allowance best.