Cutting fees and costs

Mortgage Refinance - Tips to Help You Cut Fees and Costs

Generally Mortgage Refinancing is expensive due the extra fees and costs. But you can save through refinancing by finding the lowest interest rates and by reducing the fees and costs through the structure of your loan, and avoiding PMI.

Close Credit Card Accounts

It's imperative to have a good credit score to qualify for lower interest rates, and to get one you should close all the inactive credit card accounts. Make sure to notify the credit card companies in writing that you wish the accounts closed on your request.

Next, check your credit report after 30 days to verify if they have closed the accounts after adding the comment "Closed at Customer's Request." This is to ensure that the future lenders know it was your request and not bad credit that closed your accounts. Lastly, carefully check for any mistakes in your credit report that could negatively impact your credit score.

Avoid The Hidden Cost Of PMI

When refinancing a mortgage, almost 30% of the borrowers spend the entire home's equity or at least a part of it. It is wise if it is used in home improvements or paying off credit cards. But, if you are borrowing more than 80% of your home's value, you will be hit with private mortgage insurance, costing you hundreds a year.

Pay Points Now

You can save money by paying points for lower interest rates if you plan to stay in your home for many years. You have to pay upfront fees to keep your interest payments low over the course of your loan. However, this only works if you keep your mortgage for several months.

Choose A Short-Term Loan

Short-term mortgages offer lower interest rates than long-term mortgages. In short term mortgages you have to make large monthly payments but with lower interest rates and shorter payment period you can save thousands of dollars.

Ask About Fees

Fees are a hidden cost of many mortgage loans. Lenders, by law, must disclose fees within three days of a loan application. There are several fees like - document prep fees, courier fees, administrative fees, and more.

When you are looking at different refinance options, compare the different fees involved by getting the fee lists from all the lenders. Add the loan interest to the fees and determine the cheapest loan. You may be surprised to find that your home mortgage loan had lower interest rates than the cheapest loan.