A growing number of homeowners in Berks County are refinancing due to the falling mortgage rates. With recent dips in interest rates, experts say that even those who refinanced in 2019 may be able to save money.

“Millions of homeowners could benefit by refinancing their mortgages, even if they bought or refinanced as recently as May 2019,” said NerdWallet. “A typical refinance could save more than $150 a month.”

However, rates are only one factor to consider. Consider the following things when looking into a new loan. 

How much is it going to cost you?

It is typically a good idea to refinance in order to lower your payments and interest rate. However, refinancing costs money, and you may have to pay extra charges. It's important to evaluate all of the fees, negotiate wherever you can, and figure out how long it will take you to break even.

“Estimate your break-even period: the time it takes for the accumulated monthly savings to exceed the loan fees,” said NerdWallet. “For example, if you pay $3,600 in fees to save $100 a month, it will take 36 months to break even ($3,600 divided by $100 equals 36). If you believe you’ll stay in the house beyond the break-even period, it might be worthwhile to refinance.”

Think about the terms

Is it necessary to have a 30-year loan? A 15-year term might be in order with rates this low. It might be wise to look into adjustable rates. Getting rid of private mortgage insurance (PMI) can save you even more money per month when you refinance from your FHA loan into a conventional loan. Take the time to consider your options instead of selecting the obvious choices.

How’s the service?

“On the service side, getting your questions answered in a timely and accurate way is an important element of the process,” said Investopedia. “Getting a loan requires quite a bit of paperwork, as well as the collection and dissemination of a significant amount of personal information. Having a single, reliable point of contact for your questions can make the difference between a smooth, easy process and a tough experience.”

A conventional loan isn't your only option. 

FHA streamlines are a lesser known refinancing option. Refinancing this way has the benefit of eliminating many of the usual lender requirements. “If you currently have an FHA mortgage, the FHA Streamline Refinance is the easiest way to get a lower rate and monthly payment,” said The Mortgage Reports. “The FHA Streamline is a ‘low-doc’ refinance with limited paperwork required; the lender doesn’t have to verify your income or credit, and there’s no home appraisal. That means a Streamline Refinance closes faster than other loans and has slightly cheaper closing costs.” 

This type of refi is also available through the VA and USDA.

Did you get a second opinion?

“Even if you go back to your current mortgage lender for your refinance, shop at least a couple of other lenders to see how interest rates and terms compare,” said NerdWallet. “You might believe that going to your existing lender will save you time and hassle. ‘They know us, they’ve already got all of our paperwork,’ you may think. If only that were true. It’s a new loan for them, just like it’s a new loan for any lender. The paperwork will be the same. When lenders know you’re shopping around, they are more likely to compete.”

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