3 Essential Tips When Figuring Out Home Refinance Interest Rates
Wednesday, May 24, 2017, 6:00 PM | Leave Comment
With mortgage rates still at their lowest point since the housing crisis in 2008, you may be considering refinancing your mortgage to a lower rate.
However, there are things you need to know before you take the steps to grab that lower rate.
These three tips can help you avoid costly errors and better understand that some “low rates” may not actually be as low as you think.
-
Know The Loan Term
The shorter the loan term, the lower the interest in most cases. If you need to keep your payments low, you need to look not only at the interest rate, but the length of the loan that comes with that rate.
Although a 2.9 percent interest looks attractive, if the only way you can get that rate is with a 15-year mortgage, you may have significantly higher payments than you do with a slightly higher interest rate.
The benefits of a shorter term, however, are that you build equity more quickly and your mortgage is paid off faster.
-
Points And Closing Costs
When you see a really low interest rate advertised, it often means that you will be required to pay points.
Points are fees paid directly to a lender at closing in exchange for a reduced rate. A point is equal to one percent of your mortgage amount, so if your new mortgage will carry one point on a $200,000 mortgage, you will pay $4,000 at closing for those points.
Different lenders also have different fees that can affect what you will have to pay at closing. A low interest rate may not be feasible if your closing costs will be $10,000.
-
Rate Lock-In
Your lender should have an idea when the best time would be to lock-in your mortgage rate.
Because mortgage rates can fluctuate daily, they can change over time. Your lender will “lock-in” the rate when they feel it is at the most beneficial for you and these are often 30 to 45 days before your closing.
Some lenders take longer to process mortgages, even as long as 90 days, so you want to be sure the rate you have been quoted is locked in during the necessary timeframe and that it does not expire before the loan is finalized.
The best way to be sure your mortgage is locked in properly is to use qualified, professional mortgage lenders who will work with you to be sure your rates are the best they can be.
Refinancing your home can be very beneficial. You can use equity in your home to do necessary improvements or simply refinance for a shorter term to pay your home off more quickly.
No matter what your reasons are for refinancing, be sure to work with a qualified professional, like those at Republic State Mortgage Co, for your own protection and peace of mind.
Throw us a like at Facebook.com/doable.finance
