If you’re looking to refinance, now is a great time to lock in your mortgage loan as interest rates are at a four year low. Recent cuts by the Fed have reduced rates significantly, and there has been a huge spike seen in refinancing. Before you jump on the bandwagon and refinance your loan, here are some tips to consider.
- Review fees: Remember to ask about all fees that are included. Negotiate and don’t pay any more fees than you have to.
- Shop around: Don’t be wedded to a single broker. It’s free to get rate quotes, so ask multiple brokers and get the best rate!
- Calculate break even: Typically, all refinance loans have fees associated with them. Calculate what the fees are and how long it will take you to recover that amount given the fees you have to pay. If you think rates will drop even more or that you’ll sell before that time, don’t refinance.
- Make sure you understand everything: Make sure you walk through the contract step by step. Don’t get caught signing your name on something you don’t understand.
- No pre-payment penalty: Make sure the new mortgage loan you’re taking on has no pre-payment penalty. Who knows if you come across a chunk or money or if you want to refinance again later.
It’s exciting to potentially pay a lower monthly mortgage. That said, before you get ahead of yourself, make sure you do the proper research and lock in the best rate.
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