What to Consider When
Refinancing: Net Savings
One of the factors
that you have to keep in mind when it comes to home
mortgage refinancing is the net savings that you will
be able to enjoy through home mortgage refinancing.
For most people, the net savings that you will be able
to obtain through home mortgage refinancing is the primary
consideration when a person is considering home mortgage
Reducing Monthly Payments
If you are considering
refinancing your home to save money on house payments,
you are either trying to reduce your monthly payments
by lowering your interest rate or you’re trying to avoid
a higher one when the initial fixed rate ARM period
expires. In the end, you will be balancing the new payments
plus the refinancing costs against the old payments.
Consider the Savings Accurately
In order to figure
how a refinance will benefit you, you must work out
your new costs accurately. Your primary cost will be
points, which is a fee equal to 1% of your loan amount.
Also called a loan origination fee, this pays the lender
for processing your application and for any time involved.
You will also have an application fee, appraisal fee,
and possibly attorney’s fees for the lawyers the lender
will hire to help with the legal aspects of your loan.
Consider All Fees and Costs
Don’t forget the other
miscellaneous fees your lender may charge for: title
searches and insurance, inspections, mortgage insurance,
surveys, and other small items. When considering your
refinancing options, make sure you know all these fees
before applying for your loan. Some lenders are now
offering no fee or low fee refinancing loans, so check
and see if lenders in your area have that option available—just
make sure they don’t make up for it all with a high