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SmartTips on Refinancing Your Current Mortgage.
1.   Q. How can I find the best rate?
A. Shop around.
Compare both interest rates, annual percentage rates (APRs) and terms. Even a .25% difference in rate can add up to big savings, over time.
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2.   Q. Should I refinance now, even if I have to pay a fee?
A. Calculate how long it will take you to break even.
There are typically fees associated with a mortgage refinance. To figure out if those fees make it worth it to refinance your mortgage, calculate how long it will take you to break even. For instance, if it costs you $800 in fees, and refinancing lowers your monthly mortgage payment by $50, it will take you 16 months to recover the cost of refinancing. If you’re not going to stay in the home that long, it may not make sense to refinance.
3.   Q. What is PMI? Will I need to pay it?
A. If you have less than 20% equity in your home, you may be required to pay mortgage insurance (PMI).
This insurance protects the lender, should they need to foreclose on your loan, and can be paid monthly, or in one lump sum. The cost of mortgage insurance is something to consider if you’re thinking about tapping into your home’s equity and increasing the amount of your new loan.
4.   Q. Which is better a fixed or adjustable rate?
A. Before you refinance, you should consider all your options.
A fixed rate mortgage stays the same for the entire length of the loan, while the interest rate of an adjustable rate mortgage changes with the market over time. Although an adjustable rate mortgage might offer lower payments initially, if rates go up, your payment will, too. You should carefully analyze your needs before choosing a new loan product, and GetSmart’s lenders will be happy to assist you in this endeavor.
5.   Q. What is a prepayment penalty?
A. Some lenders include a prepayment penalty – a fee for early pay-off – in their mortgage loan terms.
Make sure you address this issue directly with your loan officer, as some lenders will charge a substantial fee for early loan payoff.
6.   Q. I have a first and second mortgage. Should I refinance both?
A. If you’re paying high interest on a second mortgage, consider rolling it into your new mortgage when you refinance.
Combining both loans might give you an overall lower interest rate, and could save you a lot of money over the course of the loan, especially if the new combined loan-to-value ratio is less than 80%.


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