Obtaining lower monthly mortgage payments can be an attractive proposition, however, there are costs associated with it so it is important to do a cost-benefit analysis. Refinancing costs and changes involve a change in interest rate, a change in loan repayment length, and a possible change in the type of rate, whether fixed or adjustable, as well as origination fees and recording taxes.
The potential advantages of refinancing include:
- Reducing your interest rate and lower monthly payments
- Shortening or lengthening the repayment time
- Taking out cash,
- Consolidating mortgages
- Avoiding the risk of rising interest rates if changing from an adjustable to a fixed-rate mortgage
- Reducing or stopping private mortgage insurance if your home has increased in value
When mortgage rates are declining, the long-term savings and the lower monthly payments make refinancing more economically attractive. Refinancing is very similar to the procedures that occurred during the initial home purchase. A mortgage application must be submitted, credit reports are reviewed, property appraisals are obtained and title searches are prepared. Finally, once the loan is approved, a closing is held to sign the loan documents.
There are some refinancing fees that are negotiable. An attorney can help you negotiate a good refinancing deal. For example, mortgage quotes are marked up to create a commission for the person arranging the loan or to create a premium when your loan is sold to investors on the secondary mortgage market. For assistance with home refinancing, contact an attorney experienced with property matters.
Weinstein Chase Messinger & Peters is an experienced real estate law firm serving Brooklyn and all of New York with quality legal services. If you need a consultation, please contact our office today.