Questions to Ask When Refinancing Your Home

Before you jump into the refinance journey, here are some questions that will need answered:

What Are My Goals?

Do you want to lower your monthly bills? Or maybe you want to shorten the term of your loan? Before you decide to refinance, make sure you know why you are doing so and how it can benefit you in the future.

Can I Afford the Closing Costs?

Refinancing your mortgage comes with the same type of closing costs you paid when you initially bought your home. The best way to handle these costs is to pay them upfront instead of including the fees into your monthly payment, making your payments higher.

Borrowers must pay closing costs to your lender when you finalize your refinance. The specific closing costs that you will pay depend on where you live and the lender you choose. The average closing costs are around 2 - 5% of the total value of your loan.

What Are the Downsides to Refinancing?

Like any kind of financing, refinancing does come with its downsides. Talk to your mortgage lender about the pros and cons of refinancing and whether it is the best option for you.

What Types of Loans are Available?

There are many different types of home loans and various options you can choose from when refinancing your mortgage. It is smart to understand the loan type you currently have and the refinance options your lender offers. Ask your lender which types of loans qualify for a refinance and which option will save you the most money.

What Types of Refinances are Available?

There are different types of refinances. The two most common types are rate-and-term refinances and a cash-out refinance. A rate-and-term refinance changes the rate and term of your mortgage loan. When you refinance your rate or term, your monthly payment will change without changing the principal balance. A cash-out refinance lets you accept a higher loan balance in exchange for taking cash out of your home equity. Talk to your lender about the benefits of each type of refinance and which option is best for you.

What do I Need to Do to Qualify for a Refinance?

Every lender has their own set of standards that borrowers need to meet to qualify for a refinance. Most lenders look at your credit score and home equity. Talk to your lender about their specific requirements for these areas and whether you qualify.

What is the Difference Between Interest Rate and APR?

These terms are often confused, but they are actually not the same thing. Your interest rate is the base percentage you pay on your loan, while your APR is your interest rate plus an additional fees and closing costs associated with the loans. When refinancing your loan, look for the lowest APR's to save the most money.

How Will A Refinance Affect My Monthly Payment?

The answer to this question depends on the refinance option you choose. Your monthly payment will decrease if you choose a lower APR and keep your term the same. If you decide to refinance to a lower term, your monthly payment will go down, but you will pay more in interest over time. Or you may choose to refinance to a shorter term, which will increase your monthly payment, but you will own your home sooner. Your lender can look at your loan details and give you an estimate of what you will pay monthly depending on the type of refinance.

Will I Receive a Closing Disclosure?

Yes. You will receive a Closing Disclosure at least three business days before you close on your refinance. This will include information about your new term, your APR, and any closing costs you must pay. You will have a chance to read and review this disclosure before you schedule your closing meeting.

How Do I Start the Refinance Process Through AnnieMac Home Mortgage?

The answer is simple! Fill out our Refinance Loan Inquiry.