Posted on: 16th Jan, 2009 01:27 pm
Currently I have home loan at 5.5%, if I want to refiance, should I need to pay any fee, such as processing fee, escrow and closing fee, etc. ?
Thanks.
Thanks.
You do need to pay the costs.
Sometimes you don't see the costs cause they are covered by a bank giving you a higher than market interest rate but that is unlikely nowadays.
You can always roll the costs in your loan so you don't have to pay them out of pocket
You need to figure out whether or not it will be worth it for you first.
5.5% is a pretty good rate
If you have a small mortgage or don't plan on staying in the property for it might not be worth it for you
See how much you are saving /mon on your payment ( your principle and interest payment ) vs how much the loan is going to cost you
The true cost of the loan is determined by taking all costs associated with the loan including prepaids and subtracting your escrow account refund if you get one and 1 or 2 months of payments you get to skip. This will get you a number. Lets say its $5000. Then if you saving $200/mon on your payment it means 25 months to break even and you get savings after that. So if you plan on staying in your house longer then 25 months it might be a good idea to consider a refinance.
Although if you refinance during this period or sell the house you will lose out.
Another consideration is if you adding more years to your mortgage then it might not save you as much since you just recasting the loan for longer and that's how you get the savings.
Everybody's situation is different though.
Sometimes you don't see the costs cause they are covered by a bank giving you a higher than market interest rate but that is unlikely nowadays.
You can always roll the costs in your loan so you don't have to pay them out of pocket
You need to figure out whether or not it will be worth it for you first.
5.5% is a pretty good rate
If you have a small mortgage or don't plan on staying in the property for it might not be worth it for you
See how much you are saving /mon on your payment ( your principle and interest payment ) vs how much the loan is going to cost you
The true cost of the loan is determined by taking all costs associated with the loan including prepaids and subtracting your escrow account refund if you get one and 1 or 2 months of payments you get to skip. This will get you a number. Lets say its $5000. Then if you saving $200/mon on your payment it means 25 months to break even and you get savings after that. So if you plan on staying in your house longer then 25 months it might be a good idea to consider a refinance.
Although if you refinance during this period or sell the house you will lose out.
Another consideration is if you adding more years to your mortgage then it might not save you as much since you just recasting the loan for longer and that's how you get the savings.
Everybody's situation is different though.
lch
yes you will have fees. If you want a basic understanding of what those fees are, then look around the Helpful References here. Or, you can go to my site listed below and click on CLOSING COSTS on the left side of the page towards the bottom.
yes you will have fees. If you want a basic understanding of what those fees are, then look around the Helpful References here. Or, you can go to my site listed below and click on CLOSING COSTS on the left side of the page towards the bottom.
