Mortgage Refinancing Guide MortgageloansNJ.com
Is a Mortgage Refinance the best option for me?
A mortgage refinance is a great option, but not for everyone. Typically a person should refinance if the current mortgage rate is at least two points lower than the current rate they have. Also a person needs to consider how long they plan to stay at a residence, because it may take three years before the borrower realizes the savings from the refinance. This is because of closing costs associated with the refinance. However if the closing costs are low, some people have refinanced when the current rates are 1.5 percentage points lower instead of the typical 2 percentage points.
Consider Refinancing if:
- You have a higher interest loan and want to get in a lower interest loan. You need to make sure you are going to be in the home long enough to realize the savings in interest rates.
- Want to build equity quicker with a shorter-term loan.
- Want to access equity quicker for a major purchase.
The costs of refinancing
- Application Fee – Processing fee for loan
- Title Search and Title Insurance – public record check to confirm real estate ownership.
- Attorney Review Fees – Closing costs
- Loan Origination Fees and Points – payments to lower rates or to increase the yield for the lender.
- Appraisal Fee – evaluation and valuation estimate of the property.
- Prepayment Penalty – some lenders will charge a penalty if you pay off your mortgage early.
- Other Fees and Costs (Private Mortgage Insurance, loan guarantees) These are specific and vary.