3 Things To Do When You Refinance Your Home
Are you looking to take advantage of the very low interest rates that are available and refinance your home? If so, you'll want to do the following things to ensure that you do it the right way.
Decide If It's Worth Refinancing
The first thing to do is understand what it means to get a home refinance and if it is worth it. When you refinance your home, you're pretty much starting over on your mortgage, but at a lower rate. The money that you've put into the home that is equity can be used to lower your loan amount, but you are essentially starting over on a 15- or 30-year mortgage.
You'll want to look at how much is left on your home in terms of interest to pay and then determine how much interest is paid over the lifespan of the entire refinanced loan. If your goal is to save money over time, you may discover that a new loan is going to actually cost you more over the life of the loan. If the goal is to lower your monthly payment, you may determine that a refinance is worth the additional interest payments because it makes your budget more practical each month. This will ultimately help you decide if it is worth it or not based on your needs.
Understand The Fees
You will also want to understand the fees that are associated with a home refinance. A refinance is not going to be free since you pay closing costs in order to get that loan. The lender will likely charge you for origination fees, and you'll need to pay for a new appraisal, get a home inspection, and pay for title insurance again. Even though you had all of these things done when you got your original mortgage, your refinance may be with a new lender, or your circumstances may have changed over the years. Make sure that you fully understand the fees that you will need to pay to get the home refinance approved.
Know The Full Terms Of The Refinance
Do not make the mistake of assuming that the terms of your new mortgage are going to be the same as your old one. You'll want to make sure that you still have the ability to pay off the refinance early without paying early payment fees. If not, you could end up paying more in these early payment fees if you decide you want to start paying off your refinanced loan early.
Contact a mortgage lender near you to learn more.
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