It’s pretty hard these days not to get bombarded with offers to refinance your mortgage, but what exactly does it mean to refinance and why do people do it? Here are some answers.

What is Refinancing?

At its most basic, refinancing is changing the terms of your financial obligation for another one. In terms of a mortgage, this generally means changing the terms to something more beneficial to your situation and that typically saves you money.

Why Do People Refinance?

There are a lot of different reasons why people refinance, but it really comes down to five main reasons:

1. Better interest rates
2. Consolidating debt into a single loan to pay off
3. Reducing monthly payments by extending the length of the loan
4. Reducing or altering the risk on the loan, such as going from a variable-rate to a fixed-rate
5. To free up cash

Any and all of these are good reasons to refinance, but the first and fourth reasons in particular are a great way to go from a mortgage with a high interest rate, or one that keeps changing on you, to one with a much lower interest rate that stays there and can save you money, potentially thousands in the long run.

Last Thought

Just like when you first got your mortgage, there can be closing costs associated with refinancing, so be sure to look for a company offering zero closing cost mortgages on refinancing as well to save yourself even more money.

So you’ve decided to purchase a house. Congratulations! Since this is your first time purchasing a home, you might not know exactly what to expect when you go to closing. Here’s a (very) brief look at what to expect when you show up to get the keys to your house.

A Lot of Name Signing

You are going to have to initial and sign your name on a LOT of pieces of paper. The mortgage company should provide you with a pen, but if you have one that’s easier on your hand, it might not hurt to bring it. When this much money changes hands, everybody wants your John Hancock for their records.

Be Ready to Ask Questions

When you go to closing you’ll have to sign a lot of documents, but before you sign them, they’ll be described to you. Some are fairly straight forward, others aren’t. There’s nothing wrong with asking about the ones you don’t know about as some of the closing options may actually be optional and not something you want.

Know What (If Any) Costs Are Due That Day

Thanks to CapCenter you can get a zero closing costs mortgage, but if you went with somebody else, know how big of a closing check you’re going to have to write. Your mortgage company should have told you, but be prepared either way so that you can get your keys on the day you planned.

Depending on the contract, this can be payed by either party, but the seller typically pays the majority by default. The title services and attorney fees can be combined if an attorney does the title search in place of either party.

This is a required service for commercial lenders and is often seen in real estate contracts.

We’ve already talked, in general terms, about what can be included in closing costs, so now we’re going to start a series of posts talking about those costs individually, starting off with attorney fees.

Either or both parties can pay these and the fee is typically for the lawyers to prepare and record official documents. There can be more than one attorney as each person/party/principal involved can have their own attorney present This fee is most commonly see in commercial lending situations to ensure the documents are prepared correctly.

So you’re getting ready to close on that home and you know you’re going to have to pay closing costs, but since this is you’re first home purchase you’re wondering what all is included in the generic “closing costs” that you keep hearing about. Well, here’s a list of what you could have to pay when you go to closing, though keep in mind that not all costs apply to every mortgage.   (more…)