If you’re considering a refinance of your home, you’re likely looking to lower mortgage payments. But a lower mortgage payments isn’t the only consideration when refinancing. Refinancing may impact several key aspects of your mortgage – which can work for or against you.
Before you refinance, ask your lender these five key questions – it’ll help you ensure you’re getting a deal you can afford.
What Are The Closing Costs?
Closing costs on a refinance can vary greatly from lender to lender. Closing costs can be thousands of dollars all the way down to zero depending on the program and rate option you choose. Standard closing costs include title insurance, lender fees, appraisal fees, origination fees, county recording fees and more. Before you refinance your home have a clear understanding of the estimated closing costs as you need to make sure the interest savings is sufficient to compensate for the cost of the refinance.
Are There Any Additional Fees On Top Of Closing Costs?
Lenders often vary with respect to what fees they include in closing costs. You might need to pay for a property survey, land transfer tax, or insurance – and sometimes, not all of these fees are included in your closing estimate. You’ll want to ask your lender exactly what is included in closing costs and what additional fees you’ll need to pay.
Can I Prepay Without Penalty?
If you want to pay off your mortgage early, this could very well be the most important question you ask your lender upon refinancing. Some lenders will charge you a penalty fee if you make payments ahead of schedule. If you’re refinancing in order to get a lower interest rate and pay your mortgage off sooner, you’ll want to ensure that prepaying won’t lead you to incur penalties.
When Can I Lock In My Rate?
Mortgage rates are low right now, but they’re likely to start going back up next year. So if you want to ensure you get a great deal, you’ll want to try to lock into a low rate now. Ask your lender if you can lock in your refinancing rate – it could save you a great deal of money in the future.
How Long Does It Take To Close?
Closing a refinance isn’t always straightforward, and in some cases it can take some time before your refinance is approved. For instance, your lender may want to assess your home’s value prior to issuing the refinance. In such a case, you’ll need to have a new home appraisal – which can extend the timeframe for closing.
Refinancing your mortgage can seem complicated, but when you ask the right questions, you’ll ensure you get a great deal. Contact your trusted mortgage professional to learn more about refinancing.