Are you having a difficult time paying off your current mortgage because of your family’s increasing expenses? If so, have you already considered refinancing mortgage? Refinancing your mortgage can be a good option when you want to get a fixed and lower interest rate. However, before you choose to make your final move, you should first consider the following tips.

Tips when Refinancing Mortgage

The first thing that you should do is to shop around. There are different mortgage companies offering mortgage at different rates. Therefore, it is important that you do a lot of research before going for a certain deal. You can visit mortgage sites and then browse their rates to see which one offers the lowest rate. You can also ask your friends and colleagues if they can recommend a certain lender. Spend time and do your search thoroughly.

Next, before refinancing mortgage, make sure that you figure out your break-even point. You have to know that low rates might be offered now, but they are not for every person. If your current interest rate is quite low, then you should think carefully again as getting a new loan can require a huge amount in closing costs. Make sure to calculate your break-even point (the number of months it will take you to recoup your closing costs). You can calculate it manually, or you can also use an online calculator to make the job easier.

Three, you have to know that there is really no ‘no-closing-cost’ deal. Companies usually offer ‘no-closing-cost’ deals to attract potential customers, but they will actually charge their customers in other ways. Most often, the closing cost is about 1% of the principal of the new mortgage and this covers the lawyer’s fee, home appraisals and others.

Four, consider opting for a ‘cash-in’ refinancing. Cash-in refinancing is the situation in which homeowners will swap their current loans for smaller loans, which will then bring cash to the closing table. This allows property owners to increase the equity of their home to up to 20%.

Last, get yourself a rate-lock confirmation. The low rates as of now have resulted to the numerous refinancing applications. Therefore, when refinancing mortgage, make sure that you request your bank to lock your rate with written documents. You will receive a ‘rate-lock’ sheet either by email or fax and this sheet confirms the mortgage rate that you are getting as well as the expiration of the rate lock.

Refinancing mortgage is indeed a great option, but it is still very important to understand more about it before making the final decision. Consider the mentioned things and do not hesitate to ask for help when needed. You can always visit us at Global Mortgage and we will do our best to help you. Contact us today at (619) 692-3630 to learn more.