The calculators allow you to com- pare loans that not only have different rates, but also different closing costs and points paid, so you are able to see the overall savings of many combinations. G’DAY MITE!
Daulton suggests a good rule of thumb for whether you should refinance with a particular loan package: “Take the closing costs and divide them by how much you would be saving each month with your new loan. The answer should be 24 or less. That’s the number of months it will take you to recoup the closing costs of the loan and to start saving money.” The average time a homeowner holds a loan these days is 5. 2 years, so it only makes sense to refinance for a better rate if you can actually save money for more
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“When you apply for a loan, mortgage brokers and lenders are required to give you an estimate of the closing costs within three business days and then a disclosure of the costs at the signing.
After signing, you have three days to rescind the contract if any costs or rates seem out of line.
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Before approaching a new lender, contact your current mortgage lender with your list of attractive rates in hand. Ask if it can meet or beat the rates you have found elsewhere. Refinancing is easier, faster, and cheaper through your existing lender. Most won’t need you to fill out as many forms or to supply tax returns or bank statements. Banks find it is cheaper to keep you as a customer than to find new customers, so negotiate for a better rate or less fees. Unless your credit history is spotty, you can expect your lender to offer you a deal that’s competitive with going rates.
After you have found a rate and terms that will save you money from a lender you trust, start the application process. Many lenders ask you to lock-in your interest rate at the time of application. With a lock-in, you are guaranteed the interest rate available on the day that you apply. Otherwise, you will receive the interest rate on the day your loan closes. Make sure the lock-in period is for at least the amount of time your lender expects to need to close the loan, usually 30 to 60 days. Ask your lender whether you can get the lower rate if the interest rate is down at the time your loan closes. Lock-ins sometimes add another fee, but they are generally a worthwhile choice.
After the application process has begun, work closely with your lender and supply all needed paperwork in a timely manner. You do not want to delay the closing which can add extra fees or cause you to lose your locked-in interest rate. Be sure to be available on the date your loan is due to close. The person or persons applying for the loan will need to be there to sign the papers.
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