After reading the latest news about interest rates, you review your mortgage documents and realize that current interest rates are lower than what you’re being charged on your loan. You’re considering refinance your mortgage, but where should you start? Here are some tips for what you should expect when refinancing your mortgage.
Look For the Right Mortgage Product
While refinancing your mortgage into a 30-year mortgage might reduce your mortgage payments, this will also increase the cost of your mortgage over time.
For example, if you have 20 years remaining on your original 30-year mortgage, by refinancing into a new 30-year mortgage, you have extended your payments by 10 years.
Consider a mortgage product that balances the time remaining on your current mortgage, associated loan costs, and lowering your interest rate.
Just as when you originally purchased your home, you will want to review your credit score to ensure that you can receive the best deal possible.
Understand the Costs
There are numerous costs associated with refinancing your loan. These fees include origination fees, appraisal fees, title search charges, credit report fees, among others. You’ll want to understand all the associated costs before moving forward. This includes products that the costs have been redistributed into yoru loan via a higher interest rate.
Lock in Your Rate
Mortgage rates are constantly changing. Work with your lender to determine the most advantageous time for you. (Need a recommendation? Contact us! We know lots of wonderful mortgage lenders who may be able to help you.)
Budget for Closing
The closing process will be similar to your original home loan (minus the moving van). Have funds set aside for things like home insurance, property taxes, and other expenses that may be required at closing.
Refinancing your mortgage can be a great way to lower your payments and keep a little more cash in your pocket. Use these tips to help make the refinance process easier. If you have any questions about refinancing your mortgage or the home buying process, please feel free to contact us for more information.