Some Tips on Refinancing
Is Refinancing a Good Idea for Me?
If you're a current homeowner, you surely haven't missed the amazing array of tv, radio and internet ads aimed at potential refinance customers like yourself. Chances are, you've also received in the mail dozens and dozens of refinance offers from lenders around the country. These lenders know you're a current mortgage holder, and therefore you are by default also a potential refinance customer. The ads are soemtimes enticing:
- Reduce Your Mortgage Costs by Half!
- Save Thousands by Refinancing Now!
- Don't Miss Out-Take Advantage Before it's Too Late!
- A special time has been arranged for you to call our Refinance Center and speak to a personal loan officer on Saturday at Noon!
You may have considered refinancing, and you may have asked your friends and family what they thought. Maybe some warned you that, athough you can reduce your monthly payment by refinancing down to a lower interest rate, you have to calculate in the cost of refinancing. That is, there are lender fees that go with the refinance process. Up until a few years ago, this was very often the case.
It's Easier and Cheaper to Refinance These Days
Today, however, up front processing fees have come down a lot, as competition for refinances heats up. Refinancing is easier and more cost-effective than ever. However, you still have to beware, and understand what you're dealing with, in terms of reduced costs, lower rates, and hidden costs. You may like the lower interest rate of a refinance package, but that rate might be even lower if the lender had charged you some up-front fees. In other words, if the lender has make its refinance package more competitive by slashing off the processing fees, they might have made that lost money back by raising the interest rate ever so slightly.
What Does This Mean for Me?
Basically, it means you should shop around before you commit to a refinance package. One lender may have lower interest rates, but might charge you some fees up front. These fees will probably be in the form of points. Whether you pay points or pay a slightly higher interest rate depends on your personal situation. It depends on whether you plan to stay in your home for more than just a couple of years. As with all major life decisions, you must consider your life, your future, your current finances, and above all SHOP AROUND!!!
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