If you are thinking about refinancing your existing mortgage, you may be wondering what refinancing questions to ask your mortgage lender. While there are a number of questions to ask when refinancing, there are a few points you will want to be perfectly clear on before committing to a refinance. Knowing what to ask when refinancing will help you better understand the process, and determine if refinancing will be of benefit to you.
What is the interest rate?
While this may seem to be one of the easiest questions to ask, there is more involved than you may initially realize. Make certain to fully understand the provisions of the interest rate associated with your mortgage and if it is a fixed or adjustable rate. Try to research many lenders to get a general sense of the best mortgage rate you can get.
Are there additional fees?
A lower interest rate won’t mean much if you are required to pay high fees. A number of extra fees may be added on to your mortgage, such as appraisal, inspection, attorney, and credit check fees. Make sure you understand all associated costs and fees and calculate the cost to determine if the refinance is beneficial.
What is the term of the loan?
Determine how long you will be paying off the loan. If the life of the loan is double that of your previous mortgage, the lower interest rate may not be of much benefit. Calculate the term of the mortgage and the amount of interest you will be paying over that time period to determine if you are receiving a better deal.
Will you be required to buy private mortgage insurance?
If the value of your house has decreased since your previous mortgage or you are receiving cash out from your refinance, a mortgage lender may require that you purchase private mortgage insurance before refinancing will be granted. Calculate the additional monthly cost to determine if the refinance is still of benefit to you.
What are the Closing Costs?
Find out the closing costs associated with your refinance and make sure that you receive a good faith estimate in advance of closing. Closely examine the estimate and look for all hidden costs. Calculate all fees and additional charges, such as points, title insurance and appraisal fees. Closing costs are typically 2% to 5% of the purchase price of the home and vary upon the state and county where the home is located.
By familiarizing yourself with the process and learning what questions to ask about refinancing, you will be better equipped to understand all that is involved and determine if refinancing your mortgage is the right step. To gain further insight on refinancing visit Refinance Mortgage Rates