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Considering Refinancing a Property? 5 Important Things to Ask a Mortgage Lender First

There are a lot of situations that may encourage a homeowner with an existing mortgage in place to consider the possibility of refinancing their existing real estate in Green Bay and N.E. Wisconsin.

The first thing to understand is what is actually means to refinance a mortgage. Essential, when people choose to refinance their mortgage on their property, they will end up replacing the current mortgage value with a new loan instead.

This can be an appealing choice since it allows for an easy way to gain access to lower interest rates than they would otherwise be paying for their mortgage on their Green Bay and N.E. Wisconsin real estate. In addition, those who choose to refinance can also benefit from lower monthly payments in addition to the potential to pay off their property investments faster. With no mortgage in place, they also enjoy access to the equity of their property and can even potentially lock down a fixed-rate loan as opposed to dealing with the adjustable terms of their mortgage policy.

It also bears noting that the temptation for homeowners to opt for a refinancing option on their mortgages is particularly tempting right now since interest rates are currently sitting at record-breaking lows. That said, this is not the type of decision that should be taken without some careful forethought as to the future, and as such, it is important for homeowners to not only lay down their financial goals, but also have a plan in place to achieve them.

Even with a clear financial strategy already in place, however, there are certainly some important considerations to take into account before taking the plunge. As such, it is important for anybody considering refinancing their real estate in Green Bay and N.E. Wisconsin to schedule a sit down with their mortgage lender so that they can get some crucial questions answered first.

So with all that in mind, what are some key questions to ask? Read on to find out.

1. What Is Included in the Quote for the Loan and What Isn’t?

As part of the loan application process, a quote will be provided by the financial lender. While this is generally a good way to get a broad overview in terms of what to expect for the rate, closing costs and any other related expenses, it sometimes will not include taxes and insurance, which means that homeowners may find themselves not getting the same kind of deal they had bargained for in the end.

Keep in mind that omitting to include the applicable tax and insurance rate is more an exception than a rule. Generally, this portion of the claim will be readily accessible and sufficiently highlighted. However, it is always prudent to explicitly ask the lender if insurance fees and taxes are included in the quote nonetheless.

2. What is the Loan Term Length of the Quoted Statement?

Refinancing a mortgage is basically equivalent to setting the clock back to zero in terms of the existing term length that would have otherwise remained on the mortgage. This is why it is important to ask specific questions to the lender to get an accurate picture of the term length of the new payment schedule. Generally, the borrower has some choice here and may prefer to vary the term length anywhere between the ambit of a ten to a thirty-year payment schedule.

3. What Types of Out-of-Pocket Costs Can be Expected?

It is important to clear the air about any additional fees that are not included in the given quote before closing the deal. In addition, these types of costs tend to vary according to specific circumstances, and as such, it is always a good idea for anybody considering a mortgage refinance should be sure to ask their lender if there will be out-of-pocket costs, and if so, how much they can expect to have to cover.

Some potential additional costs to expect often go toward things like a property survey or any insurance costs not already included in the quote, just to name a couple of examples.

4. What Will be the Closing Costs?

While the specific terms will vary, it is the norm to expect to pay somewhere between 2 to 3 percent of the total loan as closing costs in a refinancing deal. This generally will total well into the thousands, and it is important for homeowners to understand that this money will usually need to be paid just before or after the deal is finalized.

In addition, different lenders may charge for different types of services so closing costs can vary. This means that it is important to have a good idea of the closing costs that each potential lender would be expecting in order to get an accurate picture of the total package. Some common closing cost charges include appraisal fees, bank fees and any costs to cover any attorney services required to finalize the deal.

5. Will There Be Any Available Equity to Cash Out?

One of the main draws to refinancing a mortgage is access to equity, and as such, it is preferable to have.

After all, those who don’t have access to at least some equity will have more difficulty refinancing in general and may have to agree to terms that may be more unfavorable than that of the mortgage itself, so it is important to get an idea of how much equity there is to spare before committing to the process.

The Takeaway

Keep in mind that while the cost of refinancing the mortgage can depend on factors like credit score and loan amount, many of these factors are also variable, meaning that different lenders may offer more competitive rates than others. This will likely be particularly true if they know that their potential client is already shopping around, so it is always a good idea to visit at least a few lenders before locking down a final deal.

Given the current market conditions, some people shopping for homes for sale in Green Bay and N.E. Wisconsin may already be considering the potential to refinance their mortgage in the future. This is all well and good, but only if they take all important considerations into account before making the move.

Working with qualified realtors in Green Bay in N.E. Wisconsin is always the best way to lock down the right type of property that can offer mortgage rates that work, and if this is the case, there may be no need to consider refinancing further down the line.

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