After the application of a home loan, you will receive two documents, a loan estimate, and closing disclosure. On the surface, these documents are identical but they both serve slightly different purposes. Up Next: Expenses To Expect In The First Year Of Homeownership Here is what you need to know about the differences between these […]
Top Tips for Refinancing Home Loans in KC
The clock is ticking for homeowners who want to grab a low mortgage rate in 2014. If you think you can save money by refinancing but don’t know for sure, it doesn’t hurt to try. Speak to a loan officer to see if refinancing makes financial sense for you. Here are the top tips for refinancing home loans in KC.
Ask About Closing Costs
There are always closing costs associated with refinancing home loans in KC. Ask your lender to lay out all of the different scenarios and choose one that best suits your financial needs. Closing costs typically total around 1% of your new mortgage’s principal, covering items such as home appraisals and lawyer’s fees. There are three main types of closing cost scenarios:
- “Rolled-in” closing costs: With this option, you will not spend any money out of pocket but you will have a higher mortgage payment each month. All costs will be included in the new loan amount.
- Upfront charges: This traditional method involves bringing a certified check to your mortgage closing to cover expenses. The lender should tell you how much your costs will be at least one day ahead of time.
- No- or low-cost refinancing: You will not be charged for any closing costs but don’t be fooled into believing you will pay less. Your interest rate will be substantially higher over the life of your loan. Your fees are essentially distributed to the interest rate.
Shorten the Loan Term
If you are several years into your mortgage, you can maximize your savings by opting for a new loan with a shorter term. Many lenders offer home loans in KC with terms of 25, 20, 15, and 10 years. Discuss your options with your loan officer and decide which term will ultimately be best for your financial solution.
Seek an Alternate Option
Even if your home is currently “underwater,” you may still have a refinancing option called the “HARP 2.0 program.” The “Home Affordable Refinance Program” allows borrowers who owe more than their home is worth to refinance their current home loans in KC. If you have not refinanced yet, you may be paying a higher rate on your mortgage than you should. Your loan must meet the following basic requirements to be considered for HARP:
- Your current mortgage must be owned by Freddie Mac or Fannie Mae
- Your loan must have closed on or before May 31, 2009
- You must have no late mortgage payments over 30 days past due, in the last 12 months