How do I Refinance a Mortgage?
The term”there ai not no such thing as a free lunch” also applies to mortgage refinances. Lenders may offer a refinance with no closing costs, but their definition of”no-cost” will likely vary from yours. For that matter, it is also going to change from 1 creditor to another. That’s why the U.S. Federal Reserve Board advocates in its own Mortgage Refinancings Guide to ask each creditor for the specific terms it gives. If you’re looking for a refinance but do not wish to cover the expensive upfront fees which go with it, then there’s hope, but it comes at a price.
Talk to a licensed housing counselor. The U.S. Housing and Urban Development Department sponsors housing counseling agencies across the nation. The advice is free of charge, or low-cost, and will be able to help you to save hundreds, if not thousands, of dollars on a mortgage refinance. The counselor will explain what programs and lenders to look out for, and may even help with discussions.
Locate a lender that offers refinances. Start with your present one. Your lender may want to maintain your business and offer to waive some of the refinance charges. Store around to see what lenders have to offer. The Federal Reserve Board recommends mortgage shopping worksheets which will allow you to ask the right questions and compare the terms of every refinance.
Ask each creditor exactly what it means by”no closing costs” refinancing. As stated by the U.S Housing and Urban Development Department they usually signify no out-of-pocket expenses to the debtor. The costs are paid in two primary ways: by inputting the costs to the refinance loan, or simply by paying higher interest rates. In any event, request a break-down of the cost of refinancing with and without the”no-cost” option.
Ask each creditor for a good faith estimate of the cost of refinancing. The Real Estate Settlement Procedures Act requires all lenders to extend a good faith estimate of closing costs. Use the good faith quote document to compare like with like when choosing a refinance.
Read the fine print of this no-cost refinance you choose; check that each of the terms are as agreed. If you’re in agreement, and are confident you can afford the monthly payments, register it.