Things to Consider with Mortgages and Refinancing

by ETF Base on October 9, 2011

The following is a guest post by Emortgage Calculator, which provides mortgage calculator tools and comparison data for “whole of market” advisers:

With financing rates at record lows the world over, tougher lending requirements seems to be the primary barrier for most that are interesting in the space.  For people that do qualify, new home buys are looking more affordable than ever, but then again, housing experts have been saying that for some time now.  However, prices obviously can’t go to zero, so there will be a floor under prices eventually.

Which Mortgage Type Makes Sense?

There are several reasons to choose amongst various terms for your mortgage.  Usually, the shorter the term of the loan, the lower the interest rate attainable .  However, with rates this low across all maturities, it often times doesn’t make as much sense to go for a shorter loan that comes with a quicker payoff but much higher monthly payment.  Forexample , in America, if you can get a 30 year mortgage for 3.875% or a 15 year loan for 3.125%, having the being locked into the higher payment on the 15 year loan just doesn’t make as much sense, especially given the tenuous job market.  Many Americans are instead opting to just stay put in a 30 with the lower monthly payment since it is viewed as safer.  Very much depends on your particular situation, so the starting point to ensure you’re making the right decision is to use a tool like the one provided by which can provide you with numerous options to choose from.

Do the Fees Make the Transaction Worthwhile?

A lot of people remain on the fence for a refinance/remortgage for long periods of time because they’re either waiting for rates to drop lower or they’re unclear as to what the real benefit is.  Well, rates can’t reasonably go much lower, since there will always be some spread built in for bank fees and short-term rates are near zero everywhere.  Even long-bond rates are 2% and below in many countries.   So, it’s decision time!

How to Choose from Various Options

One of the most fool-proof ways to ensure you’re making the right decision is to set up a simple spreadsheet laying out all the upfront fees with the new monthly payments out into the future and compare against your current situation.  By using an E Mortgage Calculator, you can quickly gather rates and fees to understand which companies you should be working with.  Once those best quotes are in hand, perform some simple calculations and consider whether you’re better off with the lowest rate, the lowest fees or some combination in between – and finally, whether that is a better deal than your current situation.

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