Courtesy of Cathie Ericson Realtor.com
Refinancing your current mortgage can be lucrative. The following are some things to consider when shopping for a mortgage refinance:
1. Do you really need to refinance?
With mortgage rates currently hovering at all-time lows, this is the first question to ask yourself.
2. Should you stay with your current lender?
You already have a mortgage, and it’s easy to stay with that lender, as long as you’re happy with their service. Start your refi conversation with your existing lender, as he will be your very best resource.
3. Should you find someone new?
If you feel that your current lender isn’t doing enough, or his customer service is below par, it would then be in your best interests to consider a direct lender who services their own loans; meaning that whoever is processing your refinance is also going to work with you through the life of your loan. Direct lenders might be able to offer a zero-closing cost refinance, since they’re interested in developing long-term relationships with clients.
4. How do you find the right lender for a refinance?
With so many lender options available, how do you know where to begin? Discuss lender recommendations with your Realtor®. Your ReMax agent Laura Van Meter knows the lenders with the most competitive rates. She also knows mortgage loan officers who consistently get the job done for their clients, with outstanding follow-up and customer service. You can rely on her advice and recommendations.
5. What should you look for in a mortgage refinance?
Ask the lenders you speak with for a detailed report so you can see what the fees are and compare apples to apples. Pay attention to these details:
- Rates: Since rates fluctuate daily, you should ideally make your queries to various lenders on the same day.
- Closing costs: Compare the fees with what you’ll save, to make sure you’re at least breaking even. For example, if closing costs are $3,000, and you’re saving $100 a month, it will take 30 months to break even.
- Closing time: You want to make sure that you lock in your rate for a sufficient amount of time between application and closing—probably around 45 days. Remember, a higher rate could mean that it no longer makes sense.
- APR: Everyone talks about interest rates, but fewer people talk about APR. However, this can be a more accurate way to compare the total cost of loans. APR combines the interest rate with the closing costs to create the total cost of a loan, expressed as a percentage.
- Terms: Make sure the lender outlines the terms and what will happen if it sells your loan.
If you select one lender’s package as being the best, ask for a Loan Estimate–the official document that binds a lender to the terms for 10 days.
Carefully planned and researched, along with consultation with an experienced and reputable lender, you can save thousands of dollars over the life of your refinanced loan, and enjoy a lower monthly payment.