How To Lower Closing Costs When Refinancing A Home Mortgage?
Obtaining approval for a low interest rate mortgage refinance loan can be challenging especially if your credit rating is bad. Besides, home refinancing attracts certain fees and closing costs which are required to be borne by borrowers. It is important that you had some idea regarding these before you finalize any deal. However, you can save hundreds of dollars on no closing cost refinance if you follow some guidelines as mentioned below:
- Shop Around Extensively – Shopping is the key for finding some of the best mortgage loan deals in the market. To that effect, you need to get free quotes from several lenders along with details of fees and closing costs. Compare the free proposals by taking into account closing charges to select the right lender.
- Importance of Home’s Location – The city or place where your house is located can play a crucial role in determination of closing costs that are associated with mortgage loans. Normally, closing fees can be up to 3% of the home’s selling price and in areas where taxes are high; they can be 5 to 6%.
- What if Mortgage Rates are Low? – If mortgage interest rates are low, borrowers do have the option of paying higher points at closing. Experts opine that such a consideration is unnecessary as the mortgage rates are already low. But if you plan to stay in the house for long, you can consider this option as favourable one.
- Shopping for Homeowner’s Insurance – As per latest rules laid down by the Consumer Financial Protection Bureau (CFPB), homeowners do have the option to avoid getting into the hassles of paying expensive housing insurance fees but the best way to go about it is to do extensive online shopping as it will help in saving money.
- Review Fees and Negotiate Closing Costs – After taking notice of multiple cost estimates, you need to determine overall cost-to-close figures. Furthermore, you must negotiate things like processing fees as well as closing costs with lenders. Some loan dealers may not even disclose that they are charging additional fees and roll them directly into the interest rate.
- Inquire If you are Eligible for Discounts – You can save up to 40% money on your home insurance premium by qualifying for a discounted rate, also known as “Reissue Rate”. To get benefitted with the discount rate, laws in majority of the states stipulate that sellers must have purchased houses as well as insurance in last 10 years.
- Ask Seller If he is Ready to Share Closing Costs – In a struggling housing market, if a home seller has been desperately trying to sell his house for quite some time, he may indicate willingness to share at least some portion of the closing costs. Check with your real estate agent if that is possible so that you can save money.
- Determine If there are Any Newly Added Fees – Once you submit an online mortgage refinancing loan application, lender is supposed to give you CFPB’s loan estimate form within 3 days of receipt of your request. This form provides details with regards to loan terms, fees, extra charges as well as closing costs and replaces the "Good Faith Estimate".
- Look for Online Loan Dealers – Increasing competition among mortgage loan providers can help in securing a sustainable deal. At present, private online mortgage lenders are providing some of the most affordable deals to homeowners. As a result, even traditional lenders like banks are lower closing costs for staying in the market competition and getting business.