Tom Ashworth

How to Cut Refinancing Expenses

Refinancing 101

Refinancing StrategyHomeowners who are excited about lowering their rate have a tendency to ignore the refinancing costs because excited about the new mortgage.  The main thing they are interested in is that the payment is lower then what they are currently paying.

Many homeowners look and see that a lower rate is available, but many times they don’t think of the closing costs associated with that new loan.  Those costs could add several thousand dollars to your mortgage principal balance.

Here are some suggestions to help you lower your closing cost:

  • Talk to your mortgage professional and let them know that you expect the loan to be quoted with lowest closing cost.
  • Check with your current lender to see if the interest rate and closing costs might be cheaper.
  • If you’re refinancing a VA or FHA loan, consider the streamline refinance.
  • Shop around with several lenders and compare interest and closing costs.
  • Credit unions sometimes offer lower closing costs.
  • Reducing the loan-to-value (LTV) so that mortgage insurance is not required will reduce expenses.
  • Ask if the lender can use an automated valuation model (AVM), instead of an appraisal.
  • You may not need a new survey if no changes have been made.
  • There may be a discount on the mortgagee’s title policy available on a refinance.
  • Points on refinancing, unlike purchase, are ratably deductible over the life of the loan.
  • Consider a 15 year loan. If you can afford the higher payments, you can expect a lower interest rate than a 30 year loan and obviously, it will build equity faster and pay off in half the time.

A lender must provide you a list of the fees involved with making the loan within 3 days of making a loan application in the form of a Good Faith Estimate. Every dollar counts and they belong to you.  Look these over carefully.

If you have any questions feel free to email me or call me.

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