All About Mortgage Refinancing
WOW…everything about mortgage refinancing. Not exactly. But I will provide you with a few tips that will help you out in determining how to gauge your refi options. Refi, or not refi, that is the question. When should you refinance? What should you look for in a refi loan? These are important question. The following are a few tips to consider when considering refinancing your home loan.
1. Don’t rely on published rates: Keith T. Gumbinger, from HSH Associates, says, “No one is going to advertise their worst product. They advertise the best possible rate, which probably gets offered to only the top 10 percent of applicants.” There are many factors that apply to your refi: size of the loan, length of time left on current mortgage, credit score, points purchased (you may purchase points that equates to 1 point for each 1% of the loan you commit to pay,) length until close (usually 45 days,) and if you lock in your rate or let it “float.” By allowing your rate to float, you are simply asking the lender to hold of until closer to close to lock in your rate, in hopes that current rates go down. However, some lenders charge you for this privelege, often times this isn’t nearly as good a deal as it might seem.
2. Be specific on the type of loan you want: The more precise you are about the type of loan you are seeking will help the loan officer find you the best deals. Some questions to consider (and those your loan officer will need to know and will consider) are: Do you want a 15-year or 30-year? Do you need a LARGE loan (for example, $300,000+)? Are you willing to pay for points to lower your rate? The answers to these questions will depend on several factors, including when you plan to sell the house and how soon you want to relinquish your debt. Only you know can answer these question, and the sooner you know them, the better.
3. Resist “no cost” refinancing: No cost does not mean free. Quite the opposite: The closing costs are usually bundled into the new mortgage, which means you pay interest on them. The fees associated with a 30-year mortgage could cost you more than double what they would have had you simply written a check for them at closing. Or, if the costs aren’t bundled in, you’ll be charged a slightly higher interest rate. Either way, the lender wins.
4. Give yourself plenty of time to close: With most refinancings, your file is turned over to a closing or title company, which dictates the closing details. Like the lenders themselves, these firms are swamped when interest rates are low. Moreover, appraisers get backed up and can be difficult to schedule. So don’t expect the closing to happen as quickly as anyone promises.
Number 4 is extremely important for both refinancing and purchasing for the first time, I lost a piece of investment property, because I chose a 30-day close, but had trouble getting an appraiser and insurance agent out to the property. So, if you feel your market is overcome with homes for sale, you might want to extend the length of close on the refi, just to be safe.
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Some related reads:
Consumer’s Guide to Mortgage Refinancing
Improve your Situation with Mortgage Refinancing
Mortgage Refinancing
Home Mortgage Refinancing
Why Mortgage Refinancing
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- Tags: home loans, home mortgage refinance rates, mortgage refinancing, refinance rates
