If you haven’t refinanced your mortgage ever since interest rates have dropped, you may have still not missed your chance. I still know people who have interest rates on their mortgage that are over 7%, and that just seems like a crazy high amount for a mortgage interest rate to me.
However, you may have just never had a chance to refinance yet. Refinancing may not be for everyone, but it may be for you. I actually know someone who has refinanced their home loan over 5 times, and they’ve only owned their home for a few years. That is just crazy, right?
So, what exactly is refinancing?
I probably should have started from the very beginning. Refinancing is when you get a new loan (many do this for their mortgage, but you can also do it for your car loan and other loans) to replace your current one in order to receive a lower interest rate.
Refinancing your home loan can have the potential to save you hundreds of dollars each month just because you lowered the interest rate on your mortgage. You might not have been able to get as good of an interest rate the first time around because of poor credit, a young credit history, buying a home in a bad credit time period, and so on.
What do I need in order to refinance my mortgage?
In order to finance your current mortgage, there are several documents you will need.? You might need: tax returns,?W2 statements, year-to-date profit and loss statement and balance sheet if you are self-employed, paycheck stubs, copies of financial accounts,? and more.
How much does it cost?
Refinancing probably sounds pretty amazing, but you need to keep in mind that there is a cost in order to refinance your mortgage. According to U.S. News, the average fee is usually around 3% of your home loan.
So, if you have a $100,000 home loan, your fee will be around $3,000 to refinance your mortgage. These fees can include the appraisal fee on your home, title insurance and closing costs.
This cost can definitely add up quickly, especially if your home is more expensive than $100,000. The person in the example above who I used actually had a home valued at around $400,000 to $500,000, so they might have even lost money by refinancing so many times in such a short amount of time.
Have you ever refinanced your mortgage? How did it go?
Image via Flickr by Forsaken Fotos