Should you refinance?
Mortgage refinancing can be expensive. Costs include (but not limited to) :
- origination and application fees
- points (1 point is equal to 1% of the mortgage loan amount)
- pre payment penalties when retiring the original note.
You can find mortgages with few or no points to reduce your refinancing costs. Find a lender that will include the refinancing costs in the new mortgage, i.e. have them finance the fees. Shop around or check with you current lender, they may waive some of the home refinancing fees if you refinance with them. Use a mortgage calculator to estimate monthly payments.
When deciding on home refinancing you have to ask yourself how long will you be in the home and how long will it take to recover the closing costs with the new payments. Refinancing may make sense if you have an adjustable rate mortgage (ARM) as rates have been rising. Also ask yourself the following questions:
- Will your credit rating be a hindrance to a new loan?
- Will the lender work with you if you have bad credit?
- Are you getting a new loan to refinance your rate? Or are you getting a loan for a secondary reason (paying off debt or home improvement needs for example).
- Have you seen your credit report lately? Is it accurate?
Are there steps that you can take in the short term to improve your credit score before you get the mortgage quote (such as paying off small debt or challenging negative items on your credit report)?
Does the site giving the mortgage quote, give you a quote from more than one lender? Some sites give you quotes from up to four lenders at once.
Is the quote free? Also, you should be under no obligation should you decide not do business with the lender.
When you apply for a mortgage refinancing loan online you will get hard copies of all documents you filled out online. You will also get closing cost estimates and other disclosures. You will still have to sign all the documents but at least you won’t have to sit in an office filling out all those home mortgage refinancing application papers.