If you want to clear your debts once and for all hightail it to the nearest reputable lender to get a mortgage switch before rates soar to agonizing heights. In the mortgage carousel, it's smart to get on when the rates are low to maximize your mortgage loan.
The Mortgage Switch
An open mortgage presents a nice picture these days but can catch you off guard anytime should soar anew. If the present rates of a closed mortgage are a bit higher than an ARM, at least you know how much you are going to be paying during the lifetime of the mortgage. By totaling your expenses you can regularly keep away the amount you have to pay monthly; should you go short for a month, you can still hold on to your home. A mortgage switch therefore is a ready option.
If you are currently having trouble keeping up with monthly bills or want to pay off all your debts, you can make a mortgage switch and still have enough money to go around. Your bright is understandable because because existing homeowners in your neighborhood are facing the same problem but see the light at the end of a tunnel by switching their mortgage with the same lender or a new lender.
But face it, not all lenders have the same idea about renewing loans. Some lenders have toughened up their requirements in view of the rising defaults and the threat of losses. If you have a good credit standing with your lender, you can easily cinch a lower interest rate with your lender or bank. But if you have been remiss with your payments your application for a mortgage switch might be disapproved OR you have to contend with higher interest rates than what is generally given to good payers.
The current going rates for a fixed rate term for a 10 year mortgage hovers now at 5.200%. If you are paying more than this on your current mortgage and you want a lower interest rate, the mortgage switch will work for you. But make it fast before the figures increase.
The switch is plainly a new loan or a refinancing scheme. There's no mystery to it – it is still a loan that has to be paid on the dot regularly. Failing to pay the loan on time once or twice in a row can damage your credit rating but here's good news to homeowners with bad credit record – they can use the new loan to clean up their credit record by paying the mortgage bills on time and build equity on their homes, making them eligible for an equity line of credit in the future.
When applying for a mortgage switch, borrowers are asked to fill out lots of paperwork and are hit with stringent lending criteria. These days, with default payments piling up, lenders have lengthened the life loan of a new loan. Instead of looking at ten years to pay off the new mortgage homeowners are saddled with additional years between between 11 and 20 years, depending on the amount of the mortgage switch.
There are also fees to pay but knowing that what you have been through with the first mortgage, you can get better deals by cutting corners. If you are using the same lender for your mortgage switch, there may be some fees that will not be charged. Ask your lender about this or if you are using a mortgage broker to do the dirty work, let him find ways to avoid some fees. He will know what to do.
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