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Three Important Considerations for a Refinance — Besides the Interest Rate

With interest rates at rock-bottom prices, there’s a lot of discussion about refinancing. Here at the Cushing Team of Guild Mortgage in Reno, we’re fielding an unprecedented number of calls and emails from clients interested in taking advantage of low rates. But while the interest rate is important, there’s more to the story. Here are three important considerations for a refinance besides the interest rate.

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The Type of Loan

A refinance is a great opportunity to consider another kind of loan. Could you make the switch from a 30-year loan to a 15-year to get an even better rate? Maybe you could get into a fixed-rate loan in lieu of your current adjustable-rate mortgage? If you’re considering a refinance to kill two birds with one stone — upgrade your loan and get a better rate — it may be worth pursuing.

The Fees

Ask your lender about origination and processing fees. You should know upfront about closing costs on the loan, which may also include third-party fees. Ask for a closing cost estimate, which will give you an idea of fees. Another option is to get a loan estimate, which will outline the interest rate, any fees, and all terms for the loan. This is provided once you’ve actually applied for the loan, which means a hard pull on your credit.

The Lender

We’ve written regularly about the importance of finding a lender you can trust. Don’t be baited by an absurdly low interest rate and assume all lenders are the same. Work with someone you can trust, ask lots of questions, and be honest about your situation. The more your lender knows, the better equipped they are to create customized solutions just for you.

About the Interest Rate

The general rule of thumb when it comes to low interest rates is to consider a refinance if you can save at least half a percentage point in interest. In other words, if your current loan has an interest rate of 3.5% and you can qualify for a 3% rate, it’s a good idea to start thinking through the pros and cons of refinancing.

In Reno, the Cushing Team at Guild Mortgage in Reno is here to answer your questions about refinancing. Contact us today, and let’s make a plan together.

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6990 South McCarran Blvd., Suite 200 Reno, NV 89509