If this is your first time considering refinancing your mortgage, there are some important things you should know. There are several mortgage refinance myths circulating that make it difficult to know what to expect in the process. Here you can see the most common mortgage refinancing myths busted and stay informed as you move forward with the refinancing process.
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Myth #1: Refinancing Won’t Save You Money
One of the most common myths is that refinancing won’t save you money in the long-term, but the truth is that you could actually save a significant amount in interest, depending on the rate of your current loan and the available rates today. By reducing your rate by an eighth of a percent, you can save tens of thousands of dollars during the loan.
Myth #2: Refinancing Gets You a Better Deal
Unfortunately, in some cases, refinancing doesn’t get you a better deal. To ensure the process benefits you, take some time to weigh the benefits against the costs. This is especially important if you are unsure of the duration you want to remain in the house.
Myth #3: Refinancing Takes too Much Time and Effort
The refinancing process may seem complicated, but getting started might be easier than you think. The first thing you need to do is find out about your existing rate compared with current rates. Find out if there is a chance that your lender can save you money by refinancing. Although most conventional loans have tough processes to get through, you just need to take the process one step at a time. A mortgage adviser or real estate lawyer can help you navigate the steps.
Myth #4: Fixed-Rate Mortgages Are Better
The fact of this matter is that fixed-rate mortgages are not always a better option. Many experts have said that there is no way to predict the direction interest rates will go. It’s impossible to know the factors that could impact the economy and lending rates. Therefore, to decide which option is best for you (fixed rate or adjustable rate) you should consider the differences and seek professional advice about which suits your situation.
Myth #5: You Won’t Qualify
If you’re struggling with your current mortgage, you might be hesitant to approach your lender for a refinance. With the introduction of the new stress test, many lenders have taken a more conservative approach to mortgage and refinancing guidelines, which might make you weary to refinance. But even if you’re trying to get your credit back on track, you may still qualify for a mortgage. The only way to know for sure if to talk to your current lender about your options.
Myth #6: You Need Cash to Cover Closing Costs
Another common myth is that you need to pay your closing costs in cash, however, refinancing includes costs similar to those you paid when you had your original mortgage, which means the fees won’t be included in your closing costs. If paying for your closing costs up front isn’t an option for you, you have a few options. You can take “lender credits,” which reduce your closing costs in exchange for a slightly higher rate. You could also “roll-in” your closing costs by combining them with your mortgage balance. Either option can help you lower your closing costs and make it possible for you to have a “no-cost” refinance.
Myth #7: Refinancing Lowers Your Monthly Mortgage Costs
Since interest rates have gone down, this myth has been circulating among homeowners. There are many factors that affect interest rates and mortgage costs, and refinancing doesn’t always mean you will save money. When a long-term loan is shortened, monthly costs are usually higher. The costs will also differ on fixed vs. adjustable interest rates.
Myth #8: Applications Require Many Documents
This myth is an exaggeration—its true mortgage applications require many documents, but the process is made easier by personalizing the documents based on each client. Also, many lenders now to their initial applications online without documentation required. There are ways to make the application process simpler, and that may include working with a real estate lawyer who can help you navigate the paperwork and make your refinance as smooth as possible.
Our Real Estate Lawyers Can Help You Refinance Your Mortgage
Refinancing your mortgage can be a tough process to navigate on your own, so it’s wise to seek professional advice if you’re wondering if need a lawyer to refinance or how to avoid closing costs when refinancing. Since it can bring about various legal issues, working with the professionals gives you a huge advantage.
Consider Zinati Kay – Real Estate Lawyers to refinance your mortgage. We can help you understand the ins and outs of the process, and can provide the best options and solutions for your unique situation. We are a full service residential real estate law firm that provides fixed closing costs to buyers and sellers when they buy, sell, mortgage, or title transfer their property. We have been in business for 25 years and have closed over 21,000 real estate transactions. We have three lawyers to service our clients and were one of the first firms to provide fixed closing costs. We provide professional service and reasonable real estate lawyer fees and have thousands of satisfied clients to prove it.
Please feel free to contact us at (416) 321-8766 or at info@zinatikay.com for a quote on your mortgage refinance or to find out more information about our services.