If you’re thinking of refinancing your home in the near future, there is a lot you need to consider. You need to determine your own reasons for refinancing and if refinancing is a feasible option for you and your circumstances. You also need to consider which mortgage company is the best option for you, keeping in mind that your current mortgage lender might not always the best choice for your refinance. Circumstances change. Your credit score/report might have changed. Your financial situation might have changed. Taking all of that into consideration, you need to do some leg work to find the right lender and right type of loan. We’ve put together some important questions to ask prospective lenders before you decide which to move forward with.
- What fees does the lender charge for a refinance? Do they charge a commission? Do they charge a lender fee? While there are some fees that are mandatory with all refinances, such as those associated with certifications or credit checks, other might be determined by the lenders themselves.
- What types of loans do they offer, and what type is recommended for your circumstances? You want to make sure you’re getting the best rate and best terms available to you in order to get the most for your money.
- What do you need in order to qualify for a refinance? Since each lender works by their own set of guidelines, it’s important to determine what is needed to qualify right up front.
- Are there any discounts offered by the lender that you might qualify for? While most discounts are associated with first time home buyers, there are some discounts that might be available to you. Be sure to ask the right questions before signing papers.
- How long will the approved rate be locked in for? In some circumstances, it can take some time to get the necessary paperwork, inspections and appraisal submitted. Be sure the rate they offer you will be locked in long enough for you to get the process completed.
- Do they offer price match? Most all lenders will tell you they can get you the lowest rate available. Ask them if they will match rates if another lender should come in lower.
- If you’re looking for a cash out refinance, how much equity will the lender allow you to cash out? Lenders typically require you to leave 20 percent equity, however there some lenders that allow require you to leave 10 percent. Be sure you know what to expect and how that compares with what you want or need the money for before signing any papers.
- If looking for a no-cost refi, what will that do to your rate? You need to make sure your lender is aware of what you are looking for in order to get an accurate quote. Ask them for the difference in rates between a no-cost refinance and a refinance in which you pay the closing costs.
Although you might be eager to get the refinance process under way, always take the time to ask your lender questions to make sure you’re not only getting the right type of loan for your needs, but also choosing to sign with the right lender.