Ditech : Mortgage Refinancing - Avoiding the High Cost of 30 Year Mortgage Loans

The traditional 30 year fixed interest rate mortgage is still the most popular mortgage option as it allows homeowners to qualify for larger amounts. When mortgage refinancing, a 30 year mortgage doesn’t always make sense and often results in overpaying. Here are several tips to help you choose the mortgage refinancing option that is right for your financial situation.

When comparing the interest paid on a 30 year loan compared to a 15 year mortgage, you pay an astonishingly higher amount with the longer term length. Choosing a 15 year loan when mortgage refinancing, will also reduce your interest rate anywhere from .375 to .6 percent. Here’s an example to illustrate the difference in finance charges.

Suppose you apply for mortgage refinancing with a $200,000 fixed rate loan. With a 15 year term you could qualify for 5.9% interest rate. The same loan at 30 years would get you a 6.5% mortgage rate. The extra 15 years on your mortgage results in paying a whopping $153,252 in additional finance charges than if you had chosen a 15 year mortgage loan!

15 Year Mortgage Loan:

Loan Amount: $200,000
Mortgage Rate: 5.9%
Monthly Payment: $1,676.92
Total Interest Paid: $101,846.91

30 Year Mortgage Loan:

Loan Amount: $200,000
Mortgage Rate: 6.5%
Monthly Payment: $1,264.13
Total Interest Paid: $255,088.92

Your monthly mortgage payment might be $412 less per month for a 30 year mortgage loan; however, is it really worth the additional $153,252? Mortgage refinancing with a 15 year term length is becoming increasingly popular with homeowners that do their homework and run the numbers.

You can learn more about your mortgage refinancing options, including costly mistakes to avoid by registering for a free mortgage tutorial.

Ditech : Refinance Mortgage: Avoid Paying Too Much in Lender Fees

If you are in the process of taking out a new mortgage or refinancing your existing mortgage, you don’t want to overpay for the financing. Comparison shopping will help you avoid mortgage lenders with excessive fees; here are several tips to help you find the right mortgage loan without overpaying.

Mortgage lenders often disguise unnecessarily high fees in the closing costs you are required to pay to secure your mortgage. Many homeowners overlook these excessive fees because they focus solely on interest rates. To protect yourself from excessive lender fees you need to do your homework and shop from a variety of mortgage lenders and brokers. When you compare mortgage offers in this manner it becomes very easy to spot excessive lender fees.

If you are a homeowner with a poor credit rating it is especially important to compare lender fees. Bad credit mortgage lenders are notorious for overcharging when it comes to lender fees. If you find a lender that is using pressure sales tactics or asks you to sign blank or incomplete documents, find another lender to work with. This is a common practice for predatory mortgage lenders. You can learn more about comparison shopping for the best mortgage without paying too much to the lender by registering for a free mortgage guidebook.