Mortgage Refinance

If you are in debt and worried about making your monthly payments, then also consider steps other than refinancing in order to get out from under your burdens. Refinancing is a big step that can lead to some unforeseen consequences for the unfortunate home owner. If you are just hoping to get a little extra cash to get rid of a credit card debt faster, then refinancing might be a bit safer and more of an option to consider.

Why shouldn’t I refinance to get me out of debt trouble?
Back in the times of the Great Depression, people were losing their savings en masse, and were losing their homes in incredible numbers. As part of an attempt to get people comfortable with reinvesting their money in things like homes once things stabilized, the government passed a bill that protected the actual savings and assets of home buyers. This meant that if they were foreclosed upon, their personal property would be protected under the law from seizure by the lending institution.

You have made the choice to refinance your home, contacted a lender, and soon you hear the word appraisal. If you are like me, your first thought is “what is that, and how much is it going to cost me?”. An appraisal is an evaluation of the value of your property. A qualified appraiser completes it. It can cost anywhere from $200 to $500, depending on the size of your home. The homeowner pays the fee, but often it is combined with the closing costs. Your lender will supply the appraiser. If you choose to contract your own appraiser, verify with your lender what it is they are looking for. Each lender has a guideline for how an appraisal should be done. For example, a Comparative Market Analysis is in essence a drive-by to compare your property to others that have sold in your area. These appraisals usually cost less, and if performed by a real estate agent or broker, may even be free. If your appraisal is not specific enough, you may have to pay for a second appraisal.

When you refinance your home mortgage, you need to shop for more than interest rates. Points, origination costs, lock-in fees, documentation, attorney fees and notary public costs are just a few of the additional charges that can change the overall cost of refinancing. It’s important to understand refinancing fees and costs before you sign on the dotted line.

First and foremost, you need to understand the APR, or annual percentage rate. This is the single largest cost associated with a home mortgage loan. The APR includes the interest rate, points, loan service fees and brokerage fees that are charged each year you are in the loan.