If you’re a homeowner that still has a mortgage on their home, like most homeowners, you have probably been keeping an eye on the record low interest rates. The reason you should be following the rates is because low interest rates typically mean low mortgage rates; and low mortgage rates make it a very good time to refinance your home. It’s a good ideal to refinance your home when rates are lower because it has the practical and beneficial effect of reducing your payments. Once you’ve decided rates are low enough that refinancing is a smart financial move, it’s time to do your research. This article will briefly discuss 5 critical questions you should ask your lender prior to refinancing with them.
While most quotes will include taxes and insurance in them, do not assume this is the case. You want to make sure those numbers are covered in the figures you are being given. As an additional question, you will want to know how much money you should have on hand to make the refinance happen; typically you will want 2 to 3% of the home’s total value on-hand to “close” the refinance (e.g., if your home is worth $1M, you will want to have $20 - $30k on hand). It is good to know what the lender expects from you beforehand.
Another question to ask, and have answered, is how much the entire refinance will cost you up front. There may be additional costs beyond the “closing” costs of refinance, which include things like insurance or even a property survey; there is a wide range of requirements across all potential lenders, it is important to know what those costs are. In many instances, a lender will allow you to “roll” the additional costs into the loan, but you want to know if that’s an option beforehand as well.
Finally, you’re going to want to know how long the loan is going to be – this impacts the total cost of the loan over its lifetime. Keep in mind that when you refinance, you are making an entirely new loan – e.g., today is day one of that loan. Much like your first mortgage, you will want to shop around for the best deal you can find.
At the Chernov Team we understand that knowledge is power, and knowledge of how to capitalize on record low rates is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.