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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
Refinance Your Home Mortgage
If you were thinking about refinancing your mortgage, make sure you read this post because there is a new mortgage refinancing fee coming up that you do not want to pay.
Refinancing could be a great way to save money on your mortgage if you do it the right way and if you don’t get slammed with the fees.
In August 2020, the Federal Housing Finance Agency (FHFA) announced that they are going to impose a new half a percent fee on lenders on all mortgage refinances that happen through Fannie Mae and Freddie Mac after September 1st.
This news was not taken well by many executives saying that this was a money grab and some of them said that it was a tax because it is going to make refinancing more expensive for homeowners who just want to save some money.
Surprisingly, the FHFA heard this and they backed off. Instead of tacking on this fee from 1st September 2020, they decided to tack this fee from 1st December 2020.
In simple terms that means that if you refinance your home after 1st December 2020, your lender might have to pay an additional half a percent fee, which means refinancing your home might become more expensive for you.
For most people refinancing is still going to be a smart move even if you have to pay this additional fee, but if you don’t have to pay an additional couple of grands why do it?
Refinancing Options
If you are planning on refinancing right now you have two options:
1 - Rate and term refinance
Since the interest rates are at their lowest, most of the homeowners are refinancing to lower their interest rates.
This will help the borrowers to not only reduce the interest rate but also change the tenure of the loan according to their monthly expenses.
You can also make additional payments over your new mortgage payments which can help you to pay off the mortgage in comparatively less time.
2 - Cash-out refinance
If you are looking to borrow additional cash on top of your mortgage balance, you can choose to do a cash-out refinance and use the additional money from your equity for your benefit.
The benefit of getting a cash-out right now is that you will get the advantage of the low-interest rate along with cash in hand which you can use for any purpose.
Make sure that you get a cash-out only if you can afford to repay. Because failing to make payments can result in property foreclosure.
The investment could be one of the options to use the cash so that you can get returns on the amount that you have borrowed.
How to Save Money With Refinance
The simplest thing that you can do to save money, save time, and shop around to find great deals is by using a mortgage comparison tool.
We at Compare Closing LLC help you to do a fair comparison with our mortgage comparison tool.
At Compare closing you can compare deals from different lenders and help you make an informed decision.
If you have multiple quotes from lenders all you need to do is use our mortgage comparison calculator to check which lender is giving the best of the deals on your refinance or purchase.
After your comparison, if we see that there is a better deal with one of our preferred lenders, you can request a free quote in no time.
Conclusion
Is this the right time to refinance? Of course, it is. With FHFA charging .5% on every refinance starting December 1st, 2020, and the rates being historically low, this is an opportunity that you should not miss.
Some lenders may tack the entire fee to you, some lenders may eat up this cost, and some may tack a portion of this fee.
However, why to pay this fee if you can refinance now and save that additional cost.
Make sure that you do your comparison before you refinance your mortgage with any mortgage lender or mortgage broker.
Since there are fees and closing costs involved in a refinance transaction, you need to make sure that you compare the mortgage quotes in the right way and let the lenders compete for your business.
Remember, when lenders compete, you win.
