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AZ Refinance Offers Mortgage Relief to Arizona Borrowers

AZ refinance is an option for Arizona homeowners who want to reduce monthly mortgage payments. When borrowers refinance mortgages they take out a new loan to pay off outstanding mortgages. This finance option is typically used when property owners can reduce interest by at least 1-percent.

Prior to applying for AZ refinance, Arizona homeowners should review their current home loan documents to determine if a prepayment penalty exists. Many lenders offer borrowers a reduced rate of interest if they agree to remain in the home for at least five years. If borrowers sell or refinance early a penalty is assessed. Each lender’s prepayment policy varies, so homeowners must take time to determine early payoff penalty amounts.

Not all Arizona mortgage loans include prepayment clauses. FHA and VA loans do not include early payoff penalties, nor do home loans obtained through chartered credit unions. Property owners should contact their mortgage provider to discuss loan terms and refinance options.

Refinancing in Arizona can be more challenging than other states. According to the U.S. Bureau of Labor Statistics, Arizona currently has an unemployment rate of 9.1-percent. Unemployment rates have increased by nearly 3-percent since July 2008; causing many homeowners to remain unemployed or entered into a new job earning less income.

The East Valley Tribune reports Arizona property values dropped 13-percent in the first quarter of 2010, leaving many homeowners owing more on their mortgage note than their property is worth. Homeowners in Phoenix experienced the highest drop in real estate values with a decrease of nearly 18-percent.

One of the most daunting reports of the Arizona real estate market comes from The Arizona Republic, which claims Arizona’s new immigration law, SB 1070, could cause mass exodus from the state and result in additional foreclosures and further property value decline.

While all of this may sound discouraging, many AZ residents still qualify for mortgage refinance. Those who have been able to maintain a solid employment history and hold adequate home equity can benefit from refinancing into a lower interest loan. However, certain aspects of the process must be considered.

Borrowers who enter into mortgage refinancing can incur multiple expenses. In addition to prepayment penalties, banks often assess loan application and origination fees, property appraisals, home inspections, lawyer review fees, and closing costs.

AZ refinance rates can equate to several thousand dollars. However, reducing interest by 2-percent or more reduces monthly installments; allowing borrowers to recover costs within a short period of time. Depending on the amount refinanced and reduced interest borrowers can potentially save thousands over the term of the loan.

Property owners often turn to their servicing lender to refinance, but it is a good idea to comparison shop. The Internet makes it easy to compare multiple lenders interest and refinance rates. One of the most trusted sources for lender comparison is BankRate.com. Borrowers can locate nationwide and Arizona-based lenders, compare interest and refinance rates, and utilize mortgage calculators to discover potential savings.

Arizona residents should obtain a current copy of their credit report and fico score. In order to obtain prime interest rates borrowers must have a credit rating of 760 or higher. Home loan interest rates can fluctuate as much as 2-percent between pristine credit and poor credit.

Banks provide borrowers with a Good Faith Estimate of anticipated refinance fees. These estimates do not include services from third party services such as property appraisals and inspections. Lenders generally provide a list of refinance requirements and borrowers contact third party providers for cost estimates.

Homeowners who obtained bad credit mortgage loans and have restored their credit might benefit from AZ refinance. Bad credit loans carry a higher rate of interest and can add several thousand dollars to the loan amount. Borrowers with bad credit should strive to obtain a credit score of 720 or higher to reduce interest by as much as 2-percent.

AZ refinance can reduce monthly mortgage installments, but can be costly to initiate. Arizona property owners should take time to research mortgage refi options. As with most important life decisions education is the key to success. If necessary consult with a real estate attorney or mortgage specialist.