7 Tips To Get The Most Out Of Your Refinance

If you have put off refinancing your home, rest easy- it isn't too late yet.  Interest rates remain at historical low levels, so you still have time to get in a refinance before the rates spike.  Refinancing can potentially save you hundreds of dollars each month.The bad news is that although refinancing can be a smart way to lower your monthly mortgage, not all deals are good ones.  We have laid out a list of some of the ways you can avoid getting ripped off when you refinance.  We put together 7 tips to get the most of your refinance so you can rest assured in knowing you're making the best decision for you. 

1. Advertised Rates - Too Good To Be True?The advertised rates you often hear on the radio sound amazing, they promise to save you hundreds and hundreds when you refinance.  Those advertising rates are generally based on the best-possible scenario- say, someone with financials in incredible shape and a stellar credit score.  To avoid some of the shock and surprise when you refinance, do your research on what your interest rate would be specific to your own financial situation.  Lenders won't always need to pull your credit to give you a rate, but keep in mind that it is difficult to make a fair comparison if they don't have all of the information in front of them.Gathering various quotes from various lenders can make for a long day.  Rates fluctuate frequently, so it is a good idea to gather you quotes all in one day from various lenders to know which rate you'll likely get. It can sound like a daunting task, but it'll give you peace of mind to know you really did do the work to get the best rate possible.2. Be Open To New LendersThere is no reason you shouldn't shop around to different lenders when you are looking to refinance.  Customers who received two or more quotes have a higher satisfaction rating and those who got one.  Shopping around to different lenders gives you the opportunity to find the best rate for your situation.3. Look Out For Junk FeesHowever, be aware that shopping lenders means you'll need to factor in the cost for account commissions and transaction fees known as "nonrecurring closing costs".  These costs include the lender's fee for processing and underwriting, title fee, credit reports and more.  While you may have found an excellent rate, some lenders add "junk fees" to increase your closing costs and their return.  Compare the fees on each lender's estimate, and be sure to ask if something is negotiable.  These fees could play a major part in determining if the refinance makes sense financially or not.4. Do Your Own Calculations To Be Sure You're SavingTo help you determine the break-even point, or amount of time it will take for the refinance to pay for itself, it is important to have a clear picture of all the costs associated.  Calculate the total sum of your closing costs, then divide that number by the monthly savings.  Once you figure out the how many months/years to break-even, consider if that is the same amount of time, if not longer, than you plan to stay in your home.  If not, it might be best to keep your current mortgage.5. No-Cost Refi Doesn't Always Mean FreeRefinancing for no closing costs sounds incredible.  But remember, there is no such thing as a free lunch; free mortgage or free refinance included. There will always be costs to refinance, so the lender just may be hiding the costs elsewhere, possibly with a higher interest rate.  You'll likely end up paying more throughout the duration of the loan, as opposite to more upfront.  The best way to gauge the entire cost is to do the math and determine what you will be paying per month over the span of the loan.6. Explore Different Loan OptionsExplore your options with your lender.  You might go in thinking a 30-year fixed mortgage is the best bet, but a 15-year fixed might actually be best for you.  If you plan on moving from your home for just a few more years, an adjustable rate mortgage might be right for you.  Discuss these options with your lender so they can help determine the best loan option for you.7. Consider Service and ExperienceFocusing on refinance costs may have you narrowing in on the rates and fees, but there are other factors that play into your overall refinancing experience.  If comparing prices and researching is your only priority, you run the risk of having an underwhelming experience.  While the refinance process may only last a month or so, you want to keep in mind that you're likely going to have a relationship with the lender for up to 30 years.  Should any issues arise in the future, you'll want to know you can confidently go to your lender to answer your questions, and in turn, have your lender respond promptly.