Sunday, October 11, 2009

Refinancing 101

In the UK, its possible to get a fixed rate mortgage, but they tend to be for a very short term, e.g. 3 years. Generally people get variable rate mortgages that fluctuate with the market. Here in the US its possible to get a fixed rate mortgage for any term, even 30 years, so these tend to be the favored type if you intend to stay in your house for any length of time. The good thing about the mortgage industry here is that its competitive, the mortgage companies all compete for your loan, and refinancing is big business. It is very common to refinance your loan multiple times during its lifetime, to take advantage of lower interest rates or to reduce the term of your loan as your income increases. We recently got a really good deal. We refinanced at over 2% lower than our current rate, we knocked 5 years off our mortgage term and we will be paying $200 less per month. And the best part is that it didn't cost us a dime! You just can't beat that (but if you can, then please give me a call :-)

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