The goal of most homeowners looking to refinance their mortgage is to find the lowest monthly payment and interest rate. Interest rates have been rising; however, it is still possible to lower your monthly payment which will result in more cash in your pocket. Here tips to help you get started.
Talk to Your Current Mortgage Company
If your current mortgage company is willing to refinance your mortgage the process will often be much easier than starting from scratch with a new mortgage lender. Your current mortgage lender already has most of the documentation required and will not charge many of the fees associated with refinancing your mortgage. If you have a good relationship with your current mortgage company you should contact a representative and let them know that you are considering refinancing the loan.
Consider the Costs
There are many expenses associated with refinancing your mortgage. If refinancing with your current mortgage lender is not an option, you will be required to pay many of the costs you paid when applying for your original mortgage. These costs include application fees, lender fees, legal expenses, and closing costs. You may have the option of financing these fees at closing; this would allow you to refinance your mortgage with little or no out-of-pocket expenses.
Decide if Refinancing is Right for You
Most financial advisors recommend refinancing only if you are able to recoup the costs within two or three years. You recoup the costs of refinancing from the savings you incur by lowering your interest rate or monthly payment amount. There are other reasons for refinancing your mortgage; many homeowners refinance to cash out equity or consolidate home equity loans. You can learn more about refinancing your mortgage and avoiding common mistakes by registering for our free mortgage guidebook: “Five Things You Need to Know before Refinancing Your Mortgage.”