Need-to-Know–Info Before You Refinance your Mortgage

If you’ve already been through the mortgage routine, you’re pretty familiar with how the whole thing goes. Instead of putting money down on your home to get a good interest rate, you’ll be looking towards your LTV, or loan to value. You’ll go from lender to lender looking for the best loan program, instead of going from house looking for the best deal. But since you’ve been here already, there are few money-saving and beneficial things that you need to know before you begin the refinancing process.

First, you probably don’t need a mortgage broker. Although very helpful, a mortgage broker is another passenger on the “money train”, and you’re paying their fare.  Unless you have some financial issues, like a blemish or two on your credit, you won’t need to shop for lenders.  Having an 80% LTV and a solid credit score (above 640), typically warrants a simple refinance without the hassle of another mouth to feed. 

Contact your local credit union. Fabulous rates fill the walls of credit unions across the country, and they’re just waiting for you! Credit unions don’t have stockholders breathing down their necks, constantly staring at the bottom line and waiting for it to increase.  Credit unions are owned by those who have accounts and are referred to as “members” instead of customers.  All earnings are “given back” to members through lower loan and mortgage rates, and higher returns on savings accounts and CD’s.

Contact your current lender to see what they can do for you.  Your mortgager does not want to lose your business, and they may be able to give you a better refinance rate than other potential lenders.  They may be able to cut some closing cost corners, as you have already done this before with them. 

Paying points is not always a good idea Points are a fee that may or may not be added when you close on your mortgage, in this case, they’re referred to as “discount points” and can be considered interest. Instead of paying a higher interest rate for 30 years, you pay points up front to pay a lower interest rate for the remaining term of your loan.  Pints are typically equal to 1% of your loan amount, so if your note is $100,000, each point will be $1,000. 

If you don’t plan on staying in your home for a while, or are thinking about refinancing again in the future (maybe to pay for college or to put that addition on the back of the house), points are not a very smart idea, as the money you’ll be paying up front, out of pocket, or adding onto the mortgage balance just isn’t worth it in the long haul.

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