Closing cost is one of the main hurdles in refinancing. Many people just don’t have that hefty cash lying around to pay for a new mortgage. That’s why some prefer to wrap it around the loan, sacrificing interest in the process. What many don’t know is you can actually save on the closing costs when you refinance. It might not end up a lot but remember that a single point difference in interest rate could be significant in the long run.
Follow these simple tips to save on closing costs when you refinance:
Talk to Your Lender
Ask about loan modification programs and if you can avail of any of them . Modification programs allow for a change in interest rate without refinancing. Even if they do not have a modification program, they can offer you a lower interest when you refinance just to keep your payments coming. This is a good point to explore, especially if you have stellar credit.
Don’t hesitate to ask around for estimates or shop for rates. Tell them you’re comparing. Most lenders will give you attractive rates knowing there’s competition.
Once you have information from various lenders, you can use this to pitch them into the negotiation ring and have them compete for the lowest rate. Calling them and inquiring the rationale behind rate difference works. Lenders care about potential and they will do their best to keep you in their arena.
Ask for No-Cost Closing
Yes, it is possible to only pay some or none of the closing cost. This means that the lender shoulders all the costs for closing in exchange for a higher interest rate. Now this is only favorable and preferable when a) you are sure the mortgage rate climate would drop in the near future and b) you plan to move in the next coming years.
Choose the Loan Type that Suits Your Needs
There are plenty of refi loan options that are now available to the modern homebuyer. If you have good credit, there are easily available lenders who are more than willing to give you low interest rates for business. If you qualify for any of the government-insured loans, that would be more advantageous. Do your research and measure them against your needs. Choose the one that will give you the most benefit.
Refinancing entails some cost but they needn’t be a burden. Be a smart borrower and use these tips accordingly to get a good closing deal on your refinancing.