You should know a few things about refinancing your home before you do it. When you refinance your first mortgage, second mortgage, or home equity loan, you usually pay off the old loan and sign for a new one. When you refinance, you have to pay the new closing costs and points that come with getting a new loan.
How much will closing costs be when you refinance? Most of the time, it's between 3 and 6 percent of the total loan amount. So, you can expect to pay about $7 in fees for a loan of $150,000. Most of the time, a company that says it has no closing costs will make up for it by charging a higher interest rate. The mortgage broker has to make money in some way, so they will either charge a higher interest rate or higher closing costs. To compare refinance lenders, it's best to look at all of the costs.
Should I pay down my loan's points? If you plan to live in your home for more than 3 years, it might be a good idea to pay down points, which lowers your interest rate. That makes sense if you plan to stay in your home for a while, but if you want to sell it soon, you may lose more money by paying down the points on the loan.
How can I decide whether or not to refinance? If you want to know if refinancing your house at the current interest rate would save you money in the long run, you can find financial calculators online that can help you figure out if you would save money or not.
