Refinance Questions & Answers

Q. Is refinancing right for me?

Refinancing your home is a big decision. Sometimes it makes sense, and other times not. Making the decision to refinance will depend on your individual financial situation. For example, lowering your interest rate or monthly payment might be what you need, but you must ask yourself some questions first. 

• Do you plan to live in your home for a short or long period of time?
• What is the amount of equity in your home?
• Are you willing to pay points to get a lower rate?
• Will lower payments make up for the closing costs, fees and points if any?

Q. When do I refinance from an adjustable rate to a fixed rate?

 Obtaining the lowest fixed rate possible is the best idea, but not in everyone’s situation. If you are in the first year of an adjustable rate mortgage (ARM) and plan on moving in three years, refinancing would not make sense. However, if you don’t plan on moving in the next seven years and the rate on your ARM is about to go up, then obtaining a long-term fixed-rate mortgage is the best idea.

Q. Does a cash-out refinance mean higher interest rates?

The interest rate paid on a cash-out refinance loan will normally be the same as what is paid on a mortgage in which cash is not taken out. Incremental fees can be associated with a cash-out refinance loan depending on the specific loan you choose and the loan-to-value ratio. Paying off bills with the equity in your home can be a smart thing. Consider taking some money out to pay off high-interest credit cards, auto loans and any other debts you have that have non-tax-deductible interest. Please consult your tax advisor to find out whether you may be able to deduct the interest on your new loan.

 Q. When do I LOCK-IN an interest rate?

Interest rates are unpredictable. In the past and until now, rates go up much faster than they come down. If you are thinking about buying a home or refinancing your mortgage, lock in your rate now. If rates drop again, you can always refinance later. However, drops in interest rates in the near future may not be drastic enough to impact your monthly mortgage payment.

Q. Is paying points the right thing for me?

Paying points may or may not be a good idea. Again, it depends upon the individual situation. Points paid on a loan you’ve refinanced can only be deducted in small increments from your taxes, for example, 1/30th a year for a 30-year mortgage. It could take several years before your lower rate makes up for the points you pay. On the other side, if you're buying a home, points paid are a tax-deductible expense for that year. Consulting your tax advisor is the best way to go in this situation.

Q. Is there any way to avoid costs? 

Almost all loans have closing costs. There are times when lenders will cover the appraisal and title fees also waiving the application fee. However, in turn they increase your interest rate.  Lenders can also roll the costs into the amount of your loan. If you are not paying costs up front, it's called a "no closing cost" loan. Slightly increasing your mortgage might be acceptable to you, but keep in mind that it's not really a cost-free loan.

Q. What is the duration of the refinancing process?

ZeroPoint Lending refinancing normally takes between two and four weeks, depending on a few things:

• When was your most recent home appraisal?
• Is your home easy to access by appraisers?
• Are other homes in your neighborhood comparable to yours?

Getting your home appraised is more than likely the slowest part of refinancing. This is because scheduling an available appraiser during a refinancing boom is hard to come by. However, having all your paperwork organized and ready to go when the appraiser arrives will speed the process along.

Q. How much money will be due at closing?

Two percent of the home’s purchase price for prepaid interest will be needed to cover the time between the date you close your loan and the date you make your first mortgage payment. Remember pre-payment of property taxes may be required by some states. Upon refinancing, your old mortgage will more than likely have money in an escrow account that can cover these costs. Short-term loans are available while escrow transfers back, but most pay the money at the closing knowing they'll get it back when their escrow is returned.

Q. How can I reduce closing costs?

Some closing costs can be eliminated. Your lender might be able to reuse your last home appraisal or your credit report if they're recent enough.

Your mortgage lender could also re-certify some documents (appraisal, title, etc.) for less than the cost of getting new ones.

If you are wondering whether refinancing your loan is right for you, try using our Refinance Calculator or call us at 866-882-ZERO to talk to a refinance expert or click the button below and a refinance expert will contact you.