Refinancing can help homeowners to save money by lowering their mortgage payments. The terms used to refinance are often lower or better than the rates and terms of their previous mortgage. Knowing what questions to ask when refinancing mortgage can make the refinancing process faster and reduce unexpected costs.
How Long Will The Closing Process Take?
Closing, or completing, a new mortgage refinance can take some time. In some cases, it may be necessary to assess the home’s value in order to refinance the home. A mortgage lender may be able to use a previous assessment in order to process the new loan, but this often comes with a shorter time frame for closing. Paperwork can add to the time needed to close the mortgage as well, so it is important to fill out all information correctly and update the lender on any changes to avoid delays.
How Much Are The Closing Costs And Are There Any Extra Fees?
The closing costs can add up quickly for home owners looking to refinance their mortgage. Often this rate is between two and five percent of the total home purchase price. Fees such as lender fees, appraisals and insurance for the title are included in the closing costs. Asking the lender for a full list of all the closing costs is one of the most important questions to ask when refinancing home mortgage.
Homeowners wondering what to ask when refinancing mortgage will find that asking for a full disclosure and explanation of fees or taxes can help with the process. Escrow insurance or other taxes may be added by the lender, or the homeowner may be allowed to manage them. Fees may be included for this as well.
Are There Prepayment Penalties?
Homeowners who intend to pay off their mortgage early will find that this is the most important of refinance questions to ask their lender. Some mortgages have a prepaid penalty fee for those who pay their mortgage ahead of the estimated schedule, which is used to discourage homeowners from paying it early in order to refinance later for a cheaper rate.
Can The Rate Be Locked In?
Locking in a rate ensures that the new refinanced rate can help to save homeowners money. Often, when compared rates with other lenders, homeowners will find that the rate does not stay the same when they return to complete the refinance. Many lenders offer the option to lock in a rate, which means that the lender commits to offering that rate to the homeowner when they refinance. This is one of the refinance questions to ask when comparing rates to help avoid rate increases.
There may be a fee or other charge to lock in a rate with a lender. Homeowners who plan to compare rates over a period of time may end up paying a number of fees in order to lock in rates as mortgage refinance rates change. Some lenders may also offer a floating option, that allows homeowners to wait for the rates to go lower. This option can be risky as some times rates may continue to increase, costing more for the refinance.
Back to Mortgage News & Articles