Refinancing your home can be a great option for many reasons, and there are several types of refinancing available to you to do so.
Although, refinancing can be a complex process that can hold high risks and multiple variables. If you choose to refinance, you should consult with a lender thoroughly. If you’re generally curious about refinancing, you can continue to read below.
Why Would I Refinance?
When you went and shopped for home loans to purchase your house, you were looking for money to buy your house. When you took out that loan, you created a mortgage. Refinancing is the process of acquiring a new mortgage and is done for many reasons. One of the biggest reasons that people choose to do this is to reduce interest rates. Rates rise and fall throughout the year and if your rate that was fixed at the time of the signing is higher than the current rate, then you might consider refinancing to save some money. Another reason people choose to refinance is to withdraw some of their equity that they’ve built on their home, usually for large purchases such as a car. Refinancing can also reduce your monthly payments, and may also be used in the case that you want to change mortgage providers.
What Are Some of the Costs?
While not every refinancing process is exactly the same, the majority of them tend to have a few basic costs. These costs include:
- Application Fee: This fee is primarily used to cover the lender’s cost of checking your credit history, as well as any cost to process the request.
- Title Insurance/Search: This is the cost associated with title insurance that covers the policyholder in case of any inconsistency with the property title. It also covers the costs of ensuring proof of ownership of the property.
- Attorney Fees: A lender will have an attorney handle the closing, and any fees that are associated with those services are usually paid by the borrower. There might be other legal fees as well, and it will depend on your specific situation and lender.
- Origination Fees: This is the fee imposed by the lender for their work in preparing the mortgage loan.
As stated before, some of these fees could be waived, depending on your chosen lender. It’s important to be aware of any fees involved with your specific refinancing agreement and to find a lender that will provide you with these details and help you through the process. An astounding 59% of homeowners wish they understood the terms of their mortgage better, according to data from September 2016. Choosing the right lender who can explain to you the details of home loans or refinance in depth is essential.
Looking to refinance or inquire about home loans? Contact us today to get started.