There can be a number of benefits to refinancing your home mortgage – particularly if interest rates are lower than they were when you initially took out the loan. For instance, depending on your current rate and balance, refinancing could reduce your monthly mortgage payment significantly.
If you have a nice amount of equity in your home, refinancing your mortgage may mean that you can cash out some of these funds and pay off higher interest rate debts, such as car loan(s) or credit card balances.
But before you commit to a home mortgage refinance, there are several important questions that you should ask the lender. Knowing the answers to these could alleviate any unexpected surprises down the road.
One of the first questions you need to ask is whether the interest rate will be fixed or adjustable. With a fixed rate, the amount of the interest – and in turn, the amount of your monthly payment – will remain the same throughout the life of the loan. On the other hand, with an adjustable rate mortgage, your payments could go up or down.
Another question to ask the lender before you refinance is how much cash you will need to bring to the table for closing costs. Just like when you took out the original loan, refinancing your mortgage will typically come with at least some added expenses, such as title fees and taxes, as well as settlement costs such as underwriting, origination, and/or application fees. On average, though, you can expect to pay between 3 and 6% of the amount of the mortgage in closing costs when you refinance.
If you’re considering a refinance of your mortgage, contact us and we’ll provide you with all of the information you need to know before moving forward with committing on a loan. At Galaxy Mortgage, we make the whole process of obtaining a home mortgage fast, easy, and convenient.