4 tricks to make your refinance more cost effective
As mortgage rates hit an all time low, homeowners all over the country are scrambling to refinance and take advantage of the savings. And while refinancing your mortgage can be a great way to lower your monthly payments, make sure you get the full picture and consider all of the factors involved.
Don’t take the first rate you receive- Often it is tempting to grab a low rate simply because it is lower than what you are paying now. Remember that banks are competing for your business. Shop around with at least three different lenders so you know for sure you are getting the best deal out there.
Consider closing costs- Whenever you refinance, you are obligated to pay closing costs on the new loan. Closing costs can vary greatly from one lender to the next so this is another great reason to shop around. Also, remember that although closing costs are often wrapped into the loan amount, you will end up paying them down the line.
Re-shop your homeowners insurance-If you want to get the best bang for your buck, shop your homeowners insurance policy at the same time you are refinancing to see if you can find a lower premium. This could tack a few hundred dollars in savings alone onto your total annual savings. To see how much coverage your home needs talk to a licensed insurance agent or use a homeowners insurance coverage calculator.
Research penalty fees- If you are moving your loan from one lender to another, inquire with your current lender about whether they charge any type of penalty fees on closing your loan early. Take all of that into consideration before making a final decision.