Refinance-Is it a Good Idea?
Many people each year undertake refinancing their home for a variety of reasons. There are several important factors regarding home refinance which you should understand.
Questions to Ask
It’s always a good idea to ‘interview’ more than one refinance company before making a final decision. This will help to ensure you receive the best rates and terms possible. MortgageLenders.org can help you locate a selection of lenders to get the ball rolling.
When you are discussing terms with each company be sure to ask up front regarding the specific rate you can obtain for your refinance loan as well as whether there are any origination points involved. While it is entirely possible to obtain a low rate it may involve costly points. You should also ask whether there are any refinance penalties associated with the loan. Other questions you should ask include:
- Can I lock-in the rate on this loan?
- If so, how long can I lock-in the rate?
- What is the fee for locking-in the rate?
- What are the upfront costs?
- Is there a penalty for paying off the mortgage early?
- Will the lender guarantee the Good Faith Estimate of closing costs?
- Do you approve loans in-house?
- How long will it take to process my loan?
Should I Lock-In a Rate?
Remember that locking in a rate on a refinance loan is really only advisable if you anticipate interest rates to change rapidly during the time period you are concluding your loan. If rates are anticipated to be volatile it can be in your best interest to go ahead and pay the lock-in fee to avoid a higher interest rate later on. On the other hand, if the fee seems too high to you, it could be better to run the risk of a potentially higher loan payment if rates do escalate.
When choosing between lenders, don’t be attempted to always go with the lender offering the lowest rate. Sacrificing good customer service for a lower rate is never a good idea. Speak with each lender up front to determine what kind of service you can expect before making a final decision. For example, does the lender offer a streamlined loan process that requires reduced paperwork for a faster loan processing? What about an automated system that will allow you to check balance of your loan even after regular business hours? What kinds of refinance loans does the lender offer? Do they offer cash-out loans as well as the ability to refinance for a lower interest rate?
In addition, before making a decision between lenders be sure to compare apples to apples. Find out what kind of costs each lender charges. Typical fees may include:
- Application fees
- Fees for the loan origination
- Credit report
- Private mortgage insurance
- Title insurance
MortgageLenders.org can help you find a variety of home lenders to refinance your home. Let us help you get started.