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Home Tips for Refinancing Your DC-Area Home

Tips for Refinancing Your DC-Area Home

With 30-year, fixed-rate mortgages at their lowest level in nearly 60 years, it’s not only a great time to buy but also a great time to refinance your DC, Maryland or Virginia home. Even if you don’t have perfect credit or a great deal of equity in your home, there are still ways to refinance at these great low rates.Refinancing Tips
Do Your Homework – Rates from one lender to the next can fluctuate by 1 percent or more, which will determine how much less (or more) you’ll pay each month. Besides checking rates, review the fees and services a lender offers. Ask the Valentino Team who they suggest – as experts in the market also means that they have relationships for vendors (including lenders) that you can benefit from. They know the best professionals who also offer the lowest rates…and who to stay away from too!
Know Your Break-Even Point – This is the number of months it will take you to recover the closing costs of the refinance, which can be thousands of dollars. Many websites offer online mortgage calculators to help you find this number. Remember, if you already have a great interest rate, say 5 percent, you won’t gain a huge savings by refinancing to 4 percent, especially when you factor in closing costs. The general rule is to refinance only if you’ll lower your mortgage rate by a half-percentage point or more.

Nothing is Free – Closing costs are generally 1 percent of the principal on your mortgage.Regardless of what’s advertised, you will always be charged for loan expenses in one way or another. The key is to ask your lender about all available payment options, and do what works best for you. Here are three possibilities.

  • Pay Upfront - You bring a certified check to the closing to cover the various expenses.
  • Roll-In Charges - All closing costs are rolled into your loan balance. You pay nothing up front but will have a higher monthly mortgage payment.
  • No- or Low-Cost Options - You'll pay no closing costs for this option, but you'll be charged a higher interest rate for your mortgage and likely have a higher monthly payment.
Cash-In Option – The traditional cash-out refinance lets you walk away with money in hand. But with a cash-in refinance, you get a smaller mortgage by bringing cash to the lender to make up the cost difference. If you have a low property value, this type of refinance allows you to bump up the equity in your home to meet current refinancing requirements. It’s a great option if you can come up with the required cash.
Get Written Rate Locks – With so many people refinancing, you don’t want to get lost in the shuffle.Having a written document holds your lender accountable for the number they set. It’s a good idea to ask for a 60-day rate lock and to be sure your bank can produce the mortgage before the end of the lock period.
If you love your current home in DC, Virginia or Maryland, refinancing is a great way to obtain a lower mortgage payment without having to move. Knowing your options will get you the best deal possible.
Rachel Valentino and her Valentino & Associates team at Keller Williams are experts in buying and selling real estate in the Greater Washington, DC area. Contact Rachel's Team today for all of your real estate needs. Also ask about home-buying programs in DC that might help you out.
Posted Wednesday Nov 02