5 Questions To Ask When Refinancing

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5 Questions To Ask When Refinancing

Choosing the right lender is of the utmost importance when you’re looking to refinance your mortgage loan.

Your chosen lender will be the one who determines which products are available, your interest rate and more. But which lender is the right one for you?

Let’s look at five questions that you could ask your potential lender in order to gain a clearer understanding into

What’s The Difference Between Interest Rate And APR?.

“Interest rate” and “APR” are often used interchangeably. However, these rates aren’t talking about the same thing.

Your interest rate is the base percentage that you pay on your loan. Your annual percentage rate (APR) is your interest rate plus any applicable fees and closing costs associated with the loan.

When you see two percentages listed side by side, the APR will always be higher. This means you should focus on finding the lenders that offer the lowest APRs on comparable rates for the same loan programs.

Do You Offer Rate Locks?

Mortgage interest rates change daily and can vary wildly depending on how the market is moving. Refinances take less time than getting your first loan, but they don’t close in a day. A rate lock allows you to lock in your interest rate and keep the same rate while your lender closes your loan. |

This could help protect you against changes in market interest rates and ensure the predictability of your loan. Ask your lender if they offer rate locks. If they do, ask how long you can lock your rate for and if locks are free.

You should also ask about the cost of extending your rate lock if your refinance takes longer than expected

How Will This Refinance Affect My Monthly Payment?

Your choice of refinancing will affect your monthly mortgage payment. Your monthly payment will decrease if you refinance to a lower APR and keep your term the same. If you refinance to a longer-term your monthly payment will go down, but you’ll pay more in interest over time.

If you refinance to a shorter term your monthly payment will increase, but you’ll own your home sooner.

Will You Sell My Loan?

You should always work with a refinance lender that will service your loan in-house if at all possible. This makes it easier to contact your lender if you have a question or concern about your loan

What Types Of Closing Costs Can I Expect?

You must pay closing costs to your lender when you finalise your refinance, like when you got your original loan. The specific closing costs you’ll pay vary depending on where you live and your chosen lender.

Ask your lender what closing costs you’ll likely be responsible for. You should also ask your lender if you can roll your closing costs into your loan’s principal.

Getting Ready To Refinance

Asking critical questions like this is essential in setting yourself up for a successful refinancing process; test your lender’s knowledge by questioning them about the difference between the interest rate and APR, how your monthly payment will change and don’t forget to ask about rate locks and average closing costs too.

You could also connect with someone from our team to apply for refinancing or answer any queries you may have.

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