How to acquire the best mortgage refinance rates?
Refinancing your mortgage can help you save a ton of money that can be used to pay off your various household bills every month or clear your existing loan within a very short period. Nonetheless, hunting for the most affordable mortgage refinance rates available in the market is like looking for a needle in the haystack.
Understand your options
Knowing which loan types are available will help you choose the best refinancing option based on your needs – whether you want to get cash back, lower interest rates, or change the terms of your home loan. The most popular refinancing options are fixed-rate mortgages, adjusted rate mortgages (ARM), and cash-out refinancing.
Fixed rate mortgages are a great, stable, loan choice. They offer interest rates which never change throughout the loan tenure. Adjusted rate mortgage (ARM) loans, on the other hand, mean the interest rates can vary depending on the market conditions. These loans are usually cheaper and easier to get into and sometimes offer a low interest fixed rate period. The third option, cash-out refinancing is a great way to utilize the equity in your home to refinance for more than you currently owe on your mortgage, and pocketing the difference.
Shop around for the best deal
Contrary to conventional wisdom, your current lender may not have the best deal on a mortgage refinance. Nor will it necessarily be easier to deal with them compared to starting over with a new lender. So, why stay with them? Shopping around will give you access to other, more affordable mortgage rates.
Review the documents before signing them
Do your homework before coming to the closing. Go through the lender’s application forms to find out the various fees applicable. This is important because the
interest rates might be low for promotional purposes but the actual hidden rates that might make a hole in your wallet could end up being the fee structure included in the loan.
Do you know how long it will take for you to recoup your up-front transaction costs? For example, let’s say your mortgage refinance transaction costs are $3000. Let’s also assume that you will be saving $100 per month on your monthly mortgage payment. Divide 3000 by 100, and you’ll see that it will take 30 months to save enough to pay back what you spent in getting the mortgage refinance in the first place.
So ask yourself: are you planning on staying in your house for the next two-and-a-half years? If so, you’ll recoup your costs. If not, consider a different deal, one with lower costs or a better interest rate with greater savings.
Submit the documents on time
When your lender requests that you provide them with additional documentation such as income and expense statements, verification of employment, etc., don’t procrastinate. Send them along right away. The last thing you want is to be the reason that a costly delay occurs.
Get estimates of your mortgage refinance closing costs in writing
Once your mortgage broker or lending institution approves your application, the law says they are required to give you a written statement of what your fees will be for the mortgage refinance. This statement is called a “good faith estimate” (GFE). Bring it with you to the closing when it’s time to sign all the final documents. If the fees are significantly higher at closing than what is shown on the GFE, then you should insist that they are brought in line with the GFE.
By the time you begin to think about a mortgage refinance, you have a lot at stake in making sure it goes smoothly. Use this checklist to make the process of getting the best mortgage refinance rates on your home smooth and stress-free.
Prospect Financial Group
948 Garnet Avenue
San Diego, CA 92109
NMLS: 349089 | BRE: 01837707