Real Estate News

How To Choose The Best Refi: It’s Not Just About The Rates


Written By: Jaymi Naciri
Monday, July 6, 2020

Millions of homeowners could benefit by refinancing their mortgages, even if they bought or refinanced as recently as May 2019, said NerdWallet. A typical refinance could save more than 150 a month.

But the rates are just one of the considerations. If youre thinking about looking into a new loan, here are some other things to consider.nbsp;

How much is it going to cost you?

Yes, refinancing to lower your rate and your payment is typically a good idea. But refinancing isnt free, and the fees you pay can add up. Make sure you take a good look at all of the fees, negotiate where you can, and figure out how long its going to take you to break even.

Estimate your break-even period: the time it takes for the accumulated monthly savings to exceed the loan fees, said NerdWallet. For example, if you pay 3,600 in fees to save 100 a month, it will take 36 months to break even 3,600 divided by 100 equals 36. If you believe youll stay in the house beyond the break-even period, it might be worthwhile to refinance.

Think about the terms

Who says you need to stick with a 30-year loan? With rates this low, it might be time to look at a 15-year term. Maybe you want to consider an adjustable rate. Perhaps its time to refinance out of your FHA loan into a conventional loan to get rid of that private mortgage insurance PMI, which will save you even more money per month. Be sure to look at all of your options, and not just the one that seems the most obvious.

Hows the service?

On the service side, getting your questions answered in a timely and accurate way is an important element of the process, said Investopedia. Getting a loan requires quite a bit of paperwork, as well as the collection and dissemination of a significant amount of personal information. Having a single, >

A conventional loan isnt your only option.nbsp;

One of the lesser known refinancing options is called an FHA streamline. The benefit of this type of refinance is that you dont have to jump through many of the typical lender hoops. If you currently have an FHA mortgage, the FHA Streamline Refinance is the easiest way to get a lower rate and monthly payment, said The Mortgage Reports. The FHA Streamline is a low-doc refinance with limited paperwork required; the lender doesnt have to verify your income or credit, and theres no home appraisal. That means a Streamline Refinance closes faster than other loans and has slightly cheaper closing costs.nbsp;

This type of refi is also available through the VA and USDA.

Did you get a second opinion?

Even if you go back to your current mortgage lender for your refinance, shop at least a couple of other lenders to see hownbsp;interest ratesnbsp;and terms compare, said NerdWallet. You might believe that going to your existing lender will save you time and hassle. They know us, theyve already got all of our paperwork, you may think. If only that were true. Its a new loan for them, just like its a new loan for any lender. The paperwork will be the same. When lenders know youre shopping around, they are more likely to compete.



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Monday, July 6, 2020

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