Refinancing Your Mortgage
Refinancing a mortgage means that you are getting a new mortgage to pay off your existing mortgage. Common reasons to refinance are: To obtain a lower interest rate; to convert an adjustable interest rate loan to a fixed rate loan; to get cash from the equity in your home. If you are considering refinancing your home there are several items that need to be considered.
The first item to consider is whether you need to refinance your mortgage at all? If your intention is to get quick cash out of your equity and you already have a mortgage with a favorable interest rate, you should consider a home equity loan. The advantage of such a loan is that you will have very little or no expense involved in taking out the loan. The loan is often at or near the prime interest rate. The disadvantage of a home equity loan is that the interest rate is often adjustable. As a result, if the interest rate to which your line of credit is attached goes up, the interest rate of your loan and your payments will go up accordingly. When considering a line of credit, you should also understand that it is secured by a mortgage that is recorded at the registry along with your first mortgage. If you sell or refinance thereafter, both mortgages will have to be paid in full.
If you decide that it would be best to refinance your mortgage, you must next decide on the type of loan that best suits your needs. Today, there are more choices than ever. You should investigate your options by shopping around with several different lenders.
In general, if you plan to stay in your home for more than a few years, it is best to get a fixed interest rate loan, especially with interest rates currently at low levels. Also, you should look into a 15 year mortgage instead of the traditional 30 year mortgage. Although the monthly payments would be larger with a 15 year mortgage, they may not be as large as you might believe and you would save a great deal of money over the life of the mortgage. Further, interest rates are slightly lower with a 15 year mortgage. If you decide on a 30 year mortgage, you can still save money by paying half of your monthly mortgage payment every two weeks instead of once a month. You can have the payments automatically withdrawn from your checking account.
When refinancing your mortgage, you may be able to save thousands of dollars by having the existing mortgage assumed and modified by the new mortgage. If your new lender will do this, you would not be required to pay the mortgage tax on the remaining balance of your mortgage. Not all lenders will allow you to do this. Your current lender is more likely to assume and modify your existing mortgage. Although there are extra fees involved in assuming the old mortgage, if the balance due on your existing mortgage is large enough, this procedure would be well worth the cost.
It is advisable to have your own attorney represent you in the refinancing procedure. Your lawyer should help guide you through the process and be at your side at the closing when you will be asked to sign many complicated documents. These documents will require you to pay large sums of money for many years and will place a lien on your home. With your own independently selected attorney, you can be confident that you will know what you are agreeing to when you put your signature to those documents.
Our fee to represent you in the refinance of your home is $2,000. $500 is paid upon retaining and $1,500 at the closing.