Mortgage Refinancing – Rates, Analysis, & Where to Get Started

Family sitting on the front steps of the home that they refinanced.If you are considering refinancing your property, then kick-off your research at ForTheBestRate.com. We provide a platform to compare low mortgage rates making it easy to research multiple banks and lenders. Whether you are shopping for a 10 year home loan solution, a government backed product (i.e. an FHA or VA loan), a flexible adjustable rate mortgage, or a 20 year fixed rate home loan, the lenders and brokers on this site can likely get you pointed in the right direction.

Deciding if a Mortgage Refinance is Right for You

Refinancing can be a great way to reduce your monthly mortgage payment, pay your home loan off sooner or consolidate debt. But refinancing doesn’t always make good financial sense for every situation. Low equity, little money to put down or an impending relocation and subsequent sale of the home are a few reasons refinancing may not be a great idea. On the other hand, refinancing can save a homeowners several thousand or even hundreds of thousands of dollars. But how do you know when a refinance will pay off?

The so-called “break even point” is the amount of time it will take before the savings from your refinance will exceed the cost. The break even point is different for everyone, since it is determined through a number of different factors, including…

  • Your original loan amount
  • The original interest rate
  • The term of your original loan
  • The term of your new loan
  • The interest rate of the new loan
  • The new amount being financed
  • Estimated closing costs for the refinance
  • How many payments you’ve already made on your original loan

Instead of trying to calculate all this on your own, an easy to do is to use an online break even point calculator.

If your break even point won’t take place for three years, but you’re job is transferring you at the beginning of next year, refinancing will obviously not make sense – unless you decide to keep your property and rent it out after you move. If your break even point will occur in 1 year, and you plan on being in your home for a long time, then refinancing could be a terrific idea. Every homeowner’s situation is different, and you should always consider your own personal financial capabilities before entering into a new home loan agreement. What may work for one homeowner might not be suitable for another.

Where Can I Find Today’s Mortgage Refinance Rates? – Right Here

You can use the rate table tables on ForTheBestRate.com to research mortgage pricing and closing costs from some of the leading mortgage companies in the marketplace. These participating lenders and brokers compete on price so you’re likely to get a good deal. Keep in mind that rates may vary for multiple reasons such as a borrower’s credit score, the amount of equity in a home, type of occupancy held (primary residence, second home, or investment property) to name just a few. We encourage you to shop around the rate table and reach out to multiple companies and ask for personalized quotes including Good Faith Estimates (GFEs) which give you an idea of settlement costs and Truth-in-Lending (TIL) statements which show loans’ projected APRs.

We also recommend that you do some due diligence on the various companies you wish the work with to ensure that they have a positive track record of delivering loans on time and as expressed at the onset of the application process. You can typically find good information on the your State’s Department of Banking website or the regulating body in your area and with the Better Business Bureau. Online reviews can be good and bad. You’ll have to balance a lenders volume of business with the number of negative reviews as plenty of people use those outlets to gripe about not getting funding for circumstances beyond a lender’s or broker’s control.

Types of Refinance Programs

You can find information on a wide variety of residential refinancing solutions using ForTheBestRate.com. Below is a list of some of the most popular products in today’s market:

  • Conventional Fixed Rate Mortgages – This is the white bread of the mortgage world. The vast majority of homeowners in the US opt for 30 and 15 year fixed rate mortgages. With rates being so low in recent years, more people have been looking to shave years off of their with 10 or 20 year mortgages. With fixed rate mortgages, a borrowers loan remains consistent throughout the loan of the loan.
  • Adjustable Rate Mortgages – The upside of variable rate mortgages is that they offer introductory rates, for a set number of years, which may be lower than fixed rates at the same time. The downside is that rates can adjust up or down after the introductory rate period ends. These intro periods typically last anywhere from 3 to 10 years depending upon the ARM product. The shorter the fixed period, the riskier the loan. On the other hand, the shorter the introductory rate period, often the lower the short term interest rate.
  • Jumbo Loans – Non conforming jumbo refinancing solutions are are available to borrowers who are looking to finance loan amounts greater than the conforming loan limits for their area. Refinance rates for jumbo loans are typically higher than what’s available in the conforming loan market. You can find lenders and brokers offering both fixed and adjustable rate refinancing solutions in the rate tables on this site.
  • Government Backed Loans – The Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the United States Department of Agriculture (USDA) all offer financing assistance through approved lenders. How they insure and back these loans varies. What they have in common is that they all help borrowers refinance and purchase properties with less equity and potentially more problematic credit than Fannie Mae’s and Freddie Mac’s conventional products.

The majority of the lenders and brokers found in the rate tables on this site offer refinancing assistance on primary residences, second homes, and investment properties. Please contact them for details on the pricing and available home loan products. Any property with more than 4 units will likely require commercial financing.

Choosing a Loan Term

Mortgage loans are generally offered in 10, 15, 20, 30, and sometimes even 40 year terms. The “term” is the amount of time you will repay the loan (with interest) over. Which mortgage term is right for you will generally depend on two things: your budget and your financial goals related to the property.

The shorter the term the higher the mortgage payment, so many homeowners will find they can only afford or qualify for the payment on a 20 or 30 year loan. If the higher payment is an option than your own preferences and priorities come into play. Would you like to own the home free and clear as soon as possible? Would you like to pay as little as possible in interest? Would you like to keep your monthly investment into the home lower so money is freed up for other purposes?

Check out the following pros and cons of shorter (10 or 15 years) and longer (20, 30 years or more) term mortgages to help decide what makes the most sense for your property:

Short Loan Term Pros:

  • Lower interest paid over the life of the loan.
  • Mortgage paid off years sooner.
  • Lower mortgage rate

Short Loan Term Cons:

  • Higher monthly payment.
  • Can be tougher to qualify for due to higher payment.

Long Loan Term Pros:

  • Lower monthly payment.
  • Can be easier to qualify for.

Long Loan Term Cons:

  • More interest paid – end up paying more for the home in the end.
  • Additional years until mortgage free.
  • Higher interest rate.

If you like the idea of paying off your loan sooner and eliminating some of the interest costs but don’t want to commit to the higher payment of a ten or fifteen year loan consider making an extra payment a few times a year on your 30 yr home mortgage. Paying down the principal just a little can lead to huge interest savings and even shave years off your loan. Run the numbers using the extra payment mortgage calculator to see for yourself.

The Cost of Refinancing a Mortgage

Refinancing your existing mortgage can be a great way to save money and pay off you home sooner. During a low interest rate market, refinancing can make a lot of sense. However, don’t go rushing into a refinancing deal until you understand the costs involved.

Essentially, there are two main types of refinancing programs: Rate and term refinancing and cash-out refinancing. A rate and term refinance involves adjusting the interest rate, the loan term or both, without any new money being taken out. This is the most popular type of mortgage refinancing plan, as it usually results in lower monthly mortgage payments. A cash-out refinance is when a homeowner refinances for more than what they owe on the home and gets to spend the difference. Both of these types of refinancing plans will require certain fees and closing costs. There is another type of refinancing loan that requires no upfront costs at all – the no-cost refinance – but for the purposes of this article, we’ll talk about the costs that are usually associated with regular refinancing. Keep in mind, these are estimates only and your actual costs will vary depending on your area.

Most Common Costs Associated With Refinancing (will vary between lenders, brokers, and banks)

  • Application Fee ($75-$400)- covers initial costs of processing your loan request and running your credit report
  • Title Search and Insurance ($450-$1K+) – covers cost of examining the public records as well as the cost of a title insurance policy
  • Appraisal Fee ($250-$450)
  • Survey Costs ($125-$300)
  • Lender’s Attorney’s Fees ($150-$500)
  • Home Inspection Fees ($175-$350)
  • Mortgage Insurance (0.5% to 1.0%)
  • Points (.125% to 3+%)
  • Miscellaneous – Keep in mind you could be charged additional fees not listed above depending on what type of loan you are refinancing. FHA mortgage insurance or PMI are a few examples.

To summarize, homeowners could anticipate spending 2-6 percent of the outstanding principal in refinancing costs. If you have any prepayment penalties, those will also have to be factored in as well as the cost of paying off any second mortgages you may have. Always check with the lender who holds your current mortgage if you are unsure about anything.

Should You Work with the Same Company You Used When You Bought Your Home?

If you’re considering lowering your monthly mortgage payments or shortening the length of your loan by refinancing, you’re probably wondering where to go for the best refinancing rates. Different lenders offer different rates and loan terms, which is why it’s a good idea to shop around. That being said, the first lender you may want to contact is the company that currently holds your mortgage. They may be able to offer you a more favorable rate and lower fees in order to keep your business especially if they are holding your loan in their portfolio.

Mortgage lenders are in the business of loaning money. When you refinance through a separate company, they pay off your original loan and you then make payments to them – leaving your current mortgage lenders out of the picture. In order to keep your business, your current lender may offer surprisingly good rates – especially if you have a proven track record of making your payments on time. Naturally, your lender will still require certain criteria, (decent credit score, verify income, appraised value) so don’t expect a rock bottom rate for simply being a loyal customer.

With all of that being said, borrowers should shop around. The vast majority of home loans are sold in the secondary market. When this happens, your previous mortgage lender or broker no longer has ownership of your mortgage (in the case of a broker, they never did in the first place).  Therefore, they will not be able to adjust the terms of your loan and the advantages of working with your old originator diminish. While there is something to be said sticking with a professional who is familiar with your situation, consumers should still spend some time making sure that they are getting competitive pricing. A quarter of a percent in rate on a 30 year mortgage is not pocket change.

The information in this page is designed to help you make an informed decision when it comes to refinancing, but it does not replace the value of professional advice. Always check with a trusted mortgage professional or attorney before making any final decisions.