How to Weigh Your Options with Mortgage Refinancing

When refinancing your mortgage, remember you have lots of options.

Difficulty: Easy

Instructions

Things You'll Need:

• A good mortgage broker to consult
• Your local bank or credit union loan officer
• Time to research
• A commitment to save money

1. Contact your current mortgage company and ask them the terms of refinancing. They may want you to lock in an interest rate. Tell them you'll think about it and you'll call them back. They may limit the loan types you can take, but the refinancing expenses are usually low so often it is the best option.

2. Don't be limited or feel obligated to your current mortgage company. After you've called your mortgage company, find a good mortgage broker from friends, business associates or perhaps from a realtor you know. They charge more for services they roll into loans, but a good one can find you favorable loans that more than compensates in savings in the long run.

3. Don't commit to any kind of lock-in on the mortgage interest rate until your current mortgage company and the broker have gotten back to you with the terms of the new loan so you can compare them.

4. Check also with your bank or credit union. They may have favorable refinancing rates and terms. More options on the table gives you a wider array of choices. More work is required, but the chances of saving money is huge.

5. Try to avoid paying PMI if possible. One mortgage broker was able to save a borrower PMI by refinancing from an FHA 15 year loan to a 30 year conventional loan without paying PMI. The borrower had over 20% equity in the house, but the current mortgage company would only refinance to another FHA 30 year loan which required PMI.

6. Negotiate. Many of the fees on the settlement statement from the mortgage refinance documents are negotiable. See the link below to Elisabeth Leamy's excellent article on saving on the many fees.

Tips & Warnings

• Get a variety of quotes
• Don't lock in rates until you have multiple offers
• Educate yourself on the different fees involved
• Avoid PMI if possible
• Mortgage Broker's fees are higher
• Refinancing may not be a good option if you are moving in a few years

Resources

• What is PMI?
• Elisabeth Leamy's Complete Guide to Refinancing
• freefoto.com

[joanhaines]

on 5/7/2009 Those fees can kill you! I didn't realize you could negotiate. Thank you.

[naturalpath]

on 4/15/2009 Nice article about refinancing. Some good tips.

[poshadornment]

on 4/11/2009 Great article not realizing how negotiable everything is with these people.

[MissAudrey]

on 4/6/2009 Great article- most do not realize that EVERYTHING is negotiable. It can save a lot of money to speak up and ask questions. 5* all the way!