Refinancing for you

You already know the magnitude carried by the mortgage process. Every .25 percentage point of a mortgage loan can mean saving or spending many extra thousands of dollars.

Now, since you have been making your monthly payments for a couple of years, you want to refinance, either for a better interest rate and better terms and monthly payments in general.

The article, “Finding the Best Refinancing Deal for You” posted on mortgagecontent.com explains how you can determine when or what type of refinancing fits your needs.

The first thing you will want to do when deciding to refinance is to determine which lender or broker (including your current mortgage lender) you will want to work with and discuss their various loan products, interest rates, closing costs and fees.

Refinancing your mortgage will directly affect your financial future, so it is vital to invest some time and effort in finding the best deal for you.

There are several factors to contemplate when attempting to accomplish this.

You may want to refinance with a low- or no-cost plan.

“Some lenders and brokers offer ‘no-cost’ refinancing, in which you do not have to pay most of the required upfront processing costs and closing fees. Instead, you may pay a higher interest rate or the costs may be added to the amount you are borrowing.”

A majority of borrowers decide to refinance in order to “lock-in” interest rates, compared to their existing adjustable rate.

If you want to do this at today’s rate but will not be able to process the loan for a while, you can request that your lender provides you an interest rate "lock" or "lock-in."

“You'll also want to ask if there is a charge for locking in the rate, how long the lock-in will remain in effect, and whether or not you can obtain a lower rate if interest rates decline before your loan closes.”

You should also find out if your agent can re-issue your title insurance policy, this will save you money. “A title insurance policy protects the lender (lender's policy) or the homeowner (owner's policy) against loss arising from disputes over ownership of or liens against the property.”

Be sure to ask your lender if miscellaneous fees such as “recordation, document preparation, courier, notary, tax services, and other fees can be waived.”

These fees may depend on the type of loan you refinance or the term stipulations. These fees sound small at first but they can add up so much that it may not even be worth refinancing. But since all loans are different, if you are required to pay all these fees, you should go through a different broker or agent.

There is one last, very important, thing you should find out prior to refinancing; whether your existing loan has a prepayment penalty clause.

“If so, and you pay off your existing mortgage earlier than the terms stated in the loan documents, you may be required to pay a penalty or fee. If your loan is subject to a prepayment penalty, your loan documents should indicate the period during which the penalty applies and explain how the amount of the penalty is calculated, for example, sometimes it is a percentage of the outstanding principal balance of the loan.”

“In many states, mortgage prepayment penalties are prohibited or limited by law, regardless of the provisions contained in your loan documents.”

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