Chances are, given the economy and the housing crisis, many of you Bonus.com shoppers are searching out deals for more than just shoes these days. It can be pretty overwhelming to sort out what’s best for refinancing your mortgage, so we thought we’d pass along some tips about how to get the best deal going forward.
First, remember that before you even consider refinancing, you need to keep a few things in mind about your personal situation:
- How long do you plan to stay? If you don’t plan to reside in your current home for very much longer, a refinance might not be best for you.
- How much equity have you built up? If your goal in refinancing is cash, you have some options, but be sure to evaluate carefully.
- What will the closing costs be for the new loan? Consider the costs and if they will pay off in the long term.
- Will you be able to lock in a lower interest rate? You may have heard you shouldn’t refinance unless the interest rate is two points less, however many professional advisers declare this to be a myth.
Once you work through these points, you want to be sure to find the right lender for you. Here is where those shopping skills come in handy: Shop around! Don’t go with the first offer you find that appears great, be sure to work with several lenders and see what package is best for you. If you have poor credit, find a lender who is willing to help and offer reasonable terms.
And, beware the hidden fees! Be sure to ask your lender for a list of their fees, such as courier charges and administrative fees, which they are obligated to provide by law to you three days after you apply for a loan. If you request a list of fees from several lenders, you can make an informed decision on what loan is actually the best deal. Depending on the fees, it might not be the loan with the lowest interest rate.
Unfortunately, there are some shady lenders out there (I think if you’ve watched the news in the last year you’re pretty aware of this fact!) so be sure to request a complete Good Faith Estimate (GFE), which will outline all the fees I’ve just mentioned and also show you what, if anything, the lender will receive on the back end. This will allow you to know if you’re getting a fair deal and if your loan officer has been upfront.
There are definitely good rates and good loans available right now, just be sure to know all your facts before you start! And, just as a reminder, Frugalgrrl owns her own home, and she knows how to scout out the best bargain for just about anything, but seek out a professional for even more great mortgage wisdom!
Happy Shopping (for low points)!