Refinance?
Undoubtedly, within the last few years, we’ve all heard radio or television commercials beckoning us to refinance, refinance, refinance. Almost to the speed of a used car advertisement. When interest rates started plummeting around seven years ago, many of us jumped on the bandwagon and gave our favorite local mortgage broker a call to cash in. To be fair, the majority of us enjoyed a monthly windfall by taking advantage of those lower rates. However, with new housing stagnant and the economy waffling, it would seem that today this phenomenon is beyond its prime. Or is it? Certainly, there are a few stragglers with 10% or greater interest rates from years ago that have finally wised up, but what about the rest?
Perhaps some of the consumer confusion about refinancing today hovers around closing costs. Call me crazy, but it seems like more and more companies are claiming “no closing costs” whatsoever. Is this deal too good to be true? Are we succumbing to some other hidden fee or cost when we agree to one of these deals? More often than not, the answer to these common questions is yes. Most trustworthy mortgage brokers will tell you that there is really no such thing as zero closing costs. If you think about the different parties involved in a refinance, this conclusion makes sense. For example, who will be paying the lender (bank employees), the title company, the appraiser, or the mortgage broker for their services when all is said and done? Clearly, they won’t be working for free! Simply put, if you’re not paying these fees at closing with a check, you’ll absorb them through a higher interest rate or a larger loan amount.
Believe it or not, there is a happy ending to this story. If you spend a little time shopping around and educating yourself on some of the different costs, you may be able to locate a few good deals. They might not be “phenomenal”, but at least you’ll have the assurance that you’ve found the best option to suit your particular needs. If the thought of comparing good faith estimates is more than “light reading” for you, take your time and find a mortgage broker you can trust to explain the options. If you have trouble finding someone reputable, talk to your realtor; they will certainly be able to point you in the right direction!
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