Did you know that most homeowners will either refinance, or redo their mortgage every 5 to 7 years? That means paying thousands in lender and appraisal fees. If you have a good reason to refinance, now may be the time to speak with a seasoned loan consultant. Here are a few reasons you might consider refinancing, or just get a quick check-up on your current structure.
Reasons to Refinance
There are countless reasons to refinance, whether you want to change the details of your mortgage or take money out. Here are some of the most popular reasons to refinance:
- Change your term: If your original mortgage was a 30-year term, you might want to pay off your loan in a shorter period of time, such as changing your term to 15 years, which can change your monthly payment and lower your interest rate, too.
- Improve your home: Many borrowers opt for a cash-out refinance, in which you borrow more money than your current mortgage balance and get the difference in cash to complete renovations, landscaping, or to install solar panels.
- Pay off debt: If you’re concerned about finances, another popular reason to refinance is to get cash out to pay off or consolidate high-interest debt, student loans, or medical bills. If your home is now worth more than you originally paid for it, opting for a cash-out refinance is a great option.
- Lower your payment: If you’ve come into money, there is also the option of doing a cash-in refinance, which means you refinance and pay off part of your mortgage in the process. This lowers your monthly payments and can also shorten the term and rate of your mortgage.
- Lose the PMI: If your original down payment was less than 20 percent and you’ve been paying private mortgage insurance (PMI), you may be able to refinance into a loan without PMI. This is a great option for those with an FHA loan, especially if the value of your house has skyrocketed.
- Remove/add a borrower: If you get divorced, no matter what your divorce decree says, a lender is not obligated to remove your spouse from your mortgage. On the other hand, if you get married and want to add your spouse to the mortgage, refinancing is your only option to add or remove a borrower.
One of the greatest deterrents for borrowers is often the cost of the refinancing because the fees involved can cost you thousands and thousands of dollars.
- Application fee: When you refinance, you’re essentially closing your old mortgage and opening a brand new one, which comes with application fees costing hundreds of dollars.
- Appraisal report: Lenders typically require an appraisal of your home to assess its current value to determine whether you have enough equity to qualify for the new loan. Appraisal costs vary depending on your market, and the national average is currently at more than $300.
- Title fees: Some lenders require a title search costing hundreds of dollars in order to purchase title insurance (which can cost upwards of $800) to protect against any issues with the title transfer.
- Other fees: You may also have to pay a loan origination fee of around 1 percent of your total loan amount, in addition to recording fees amounting to roughly 1.5 percent of your loan amount, depending on your city and state requirements.
With so many fees involved, you might be asking yourself: Is it even worth it to refinance? Being aware of these fees means you may be able to minimize—or even avoid—them by working with a loan consultant to lock in a lifetime guarantee from your lender.
Our Lifetime Guarantee
Our team offers a lifetime guarantee to waive any lender fees and reimburse any appraisal costs when you refinance in the future—saving you thousands. With us, you are guaranteed low refinance rates, fast approvals, and a loan that’s right for you thanks to our strict anti-steering policy.
Schedule your free consultation with experienced loan consultant Rick Elmendorf and his team today to see how you could benefit from a lifetime guarantee from your lender.