Are you struggling finding a lender to answer the question “Who will refinance my mortgage?” There are millions of homeowners unable to take advantage of historically low interest rates for one reason or another. Here are several tips to help you find a program and a lender to get your application for mortgage refinancing approved and save thousands in the process.
How Do I Refinance My Mortgage?
The most common reason people have been unable to refinance since the housing market meltdown is a lack of equity. If you’re underwater in your home loan and have not looked into the Home Affordable Refinance Program (HARP) you’re missing a great opportunity. The only catch with this government refinance program is that your home loan must be backed by Fannie Mae or Freddie Mac prior to June 1st, 2009.
Most underwater homeowners that are not HARP eligible do not qualify for this reason. HARP 3.0 is rumored to remove this requirement but has not happened yet.
Should I Refinance My Mortgage?
The first thing you need to do is answer the question “Should I Refinance My Mortgage?” Most homeowners do this by figuring out how long it’s going to take breaking even on closing costs. The way you break even recouping your out-of-pocket expenses when refinancing is by lowering your monthly payment.
You can approximate the amount of time it’s going to take you to break even by adding up all of your closing costs and dividing by the amount your payment is going down. This will tell you the number of months it’s going to take to break even. If you sell or refinance again before breaking even you’re losing money no matter how low your interest rate.
Who’s Going To Refinance My Mortgage?
Shopping for a mortgage lender can be a confusing and frustrating process, especially if you’re shopping for a lender’s approval. Many homeowners throw fees and rates out the window only focusing on getting the first approval available. Others focus on getting the lowest refinance rates at the expense of fees. Either approach results in overpaying thousands of dollars, something that can be avoided.
Are you shopping for mortgage approval? Consider focusing your efforts on government refinance programs from the VA, FHA, or HARP 3.0 when available.
You still need to focus on fees and rates but in this case enlisting the help of a mortgage broker can help balance finding an approval with paying less in closing costs.
How Do I Pay Less To Refinance My Mortgage?
Once you’ve decided if refinancing is worthwhile for you the next step is to choose a program. If you need an FHA home loan with a 30-year fixed interest rate then all of your quotes should be for that program. Don’t let a fast-talking loan officer confuse you by quoting refinance rates across different programs.
Comparing mortgage offers across different lenders from identical programs is the only way to make an apples to apples comparison of refinance rates and fees.
Your next step in getting the best deal for your home mortgage is to focus on the fees you can control. Page two of your Good Faith Estimate details the loan origination fee, yield spread premium and any discount points. For most people paying discount points is a waste of money so requesting zero point quotes is a good starting point.
Page three has a comparison table you can refer to if you’d like to see how points affect your monthly payment.
The next largest fee that you control is the loan origination fee. This is paid to the person or company arranging your home loan. Most brokers will tell you that one percent is standard; however, I’ve reviewed community based credit unions that charge as little as $400 for loan origination.
You might find that some loan officers are unwilling to negotiate settlement charges because if they do the lender takes the difference out of their commission. If this is the case simply move on to the next lender. The less you pay closing on your new home loan the more you’ll benefit from today’s low refinance rates.
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