Refinancing your mortgage can be a great way to reduce your interest and save overtime. However, homeowners should tread carefully to make sure it’s the best decision. To help, Michele Hammond, a private home lending advisor with JPMorgan Chase, shares several key questions to determine the best options for refinancing, below.
When receiving a quote from a lender, it is important to ask them what the estimated value is they are using for your home, aka, what is the estimated value? To complete the transaction, you will need to get an appraisal in most instances. If a lender is using an unreasonable estimated value in their quote, the homeowner will see a big price change at the last minute or even see the deal go away.
Does the quote include taxes and insurance? This will be an additional monthly cost that will be part of your payment. Be sure you are looking at the full picture.
How much do I need to bring to closing? Sometimes these costs are rolled into your loan, which may work for you, but some buyers may not want those additional costs carried over time. You will need to know this in order to make the best decision for your situation.
What are my out-of-pocket costs? It is important to know if you will need to bring cash to closing in order to close the loan. Know before you go whether you will need to provide thousands of dollars to complete the deal.
Do I have room to cash out any equity? Some homeowners are interested in a refinance beyond just lowering your payment, but instead, opt to pull cash out of the equity they have earned.
Am I restarting my repayment terms? How long is the term of the loan that you are quoting me? Some are not aware, but they could be refinancing into a brand new 30-year, which means they are starting over on their terms and not where they left off. This will allow you to determine if you want to sign a new 30-year fixed or if you would like to do a 20-year or even 15-year loan.
Source: JPMorgan Chase