Home Refinance Closing Costs - Things You Should Know
Home refinancing closing costs should be consider before signing
a contract. You can actually lose money on closing costs if you
aren't careful. Shopping lenders can help you find lower fees,
but you may find other financing options have lower costs.
Length Of Time To Recoup Costs
While the general rule of thumb is to keep a loan for two years
to recoup closing costs, it isn't a hard fast rule. For one, if
you only have five years left on your loan, then refinancing
won't save you money since you have already paid most of the
loan's interest. There are also other reasons for refinancing,
such as reducing terms or improve caps on an ARM.
To know if you can save money by refinancing, take the time to
do a little math. Add up your current mortgage's interest costs
for the rest of the term. Compare this with the cost of
refinancing and the new loan's interest cost. If you can see a
savings, then refinance for those better rates.
Lenders Charge Different Fees
Most people are surprised to find that lenders charge different
fees. While the standard is a couple of thousands, points can
also increase costs. Since rates and fees vary so widely between
packages, a better number to compare is the APR, which gives the
true cost of the loan.
Online research can yield thousands of dollars in savings.
Within a few minutes you can receive several quotes from a
mortgage broker. You can also request quotes from individual
lenders' sites too.
Variety Of Refinancing Options
There are several ways to refinance your mortgage. You can
choose an ARM, fixed-rate, or hybrid. You can also reduce your
loan term or increase yearly payments to lower interest costs.
Each option has pros and cons, and should be considered with
your unique budget.
Another option to access your equity is to use a line of credit
or home equity loan. These two options don't have the closing
costs of a traditional mortgage, but they don't lower the rate
on your principal.
Before refinancing, make sure that you will save money by
researching both loans and lenders.