Three Ways to Minimize Refinance Costs
With interest rates around historic lows, you couldn’t find a better time to refinance. Being able to lock in a rate below four percent was previously unheard of and the opportunity isn’t likely to stick around for too much longer. In fact, Freddie Mac reported this week that the average commitment rate on a 30-year fixed rate mortgage rose about a half point this month and is now higher than its been in over a year. And rates are forecasted to keep gradually rising through the rest of the year. That makes now the time to jump on a refinance loan.
Yet even with rock-bottom rates, refinancing can still be costly when all the fees are factored in. To make the most of today’s stellar rates, here are three ways to minimize the costs of refinancing.
1. Keep Your Credit in Shape
Getting the best interest rate requires having the best credit. That means keeping your credit card balances low, paying all bills on time and not applying for any new credit right before obtaining a loan. It is possible to buy down your interest rate with points – each point is typically one percent of the loan total – but that will require a lot of cash upfront.
2. Roll Fees Into The Loan
Some lenders will allow you to tack the fees and closing costs onto the end of a refinance loan. This will save you money at the beginning of the loan with few out-of-pocket fees, but it will probably cost you in a higher interest rate.
3. Shop Around
Every lender has his own fee schedule. They can include a list of charges like the mortgage application fee, origination fees, document preparation fees, appraisal fees and title examinations fees. Each lender will price these differently. The only way to get the best deal is to talk with several different lenders and ask them how much they charge in fees.
Taking care of these three steps will help you secure a refinance loan that save you thousands over the course of your loan and will be well worth the effort.
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