Refinance

It's generally a good time to refinance when mortgage rates are 1% lower than the current rate on your loan. Any reduction can trim your monthly mortgage payments and the total interest you'll pay. Example: Your payment, excluding taxes and insurance, would be about $770 on a $100,000 loan at 8.5%; if the rate were lowered to 7.5%, your payment would then be $700, now you're saving $70 per month. 

Your savings depends upon how much your rate drops, how long you plan on owning the home, how long you have been paying on your existing mortgage, and how much you owe.  Your trusted lender can help you calculate your options and should present you with a comparison of how much you'll save based upon the above information. 

All refinances involve fees and regardless if they are paid by the lender (through the rate), paid by you outright, or rolled into the loan, you should weigh your options carefully. If you plan to only stay in the property for a couple of years, your monthly savings may not accumulate to recoup these costs. Example: If the total fees are $1,000 to refinance your loan and that resulted in saving you $50 each month; it would take 20-months to recoup your initial costs. It's important to consider how long you'll be in your home, before you refinance. 

In most cases you will pay similar costs from when you purchased the home - title search, title insurance, lender fees, etc. The total sum could cost up to 1-3% of the loan amount. However, these fees can be paid by a lender credit (through the rate), rolled into your loan (no money out of pocket), or paid outright at closing. It's important to note that since no title company, appraiser, credit bureau etcetera work for free, that even lenders advertising "no fees" are covering those costs in some way. Ensure your lender is transparent on who's paying for the costs and how they are being paid.

A point is a percentage of the loan amount, or 1-point = 1% of the loan, so one point on a $100,000 loan is $1,000. Points are costs that need to be paid to a lender to get mortgage financing under specified terms. Discount points are fees used to lower the interest rate on a mortgage loan by paying some of this interest up-front. Lenders may refer to costs in terms of basic points in hundredths of a percent, 100 basis points = 1 point, or 1% of the loan amount.

It depends upon how long you'll be in your property and how much savings you're generating by buying the rate down. If you plan to stay in the property for several years, paying discount points to lower the loan's interest rate is a good way to lower your required monthly loan payment.  However, if you plan to stay in the property for only a short time, your monthly savings may not be enough to recoup the cost of the discount points that you paid.

Mortgage rates can change from the day you apply for a loan to the day you close the transaction. If interest rates rise sharply during the application process it can increase the borrower's mortgage payment unexpectedly. Therefore, the lender will work with the borrower to "lock-in" the loan's interest rate guaranteeing that rate for a specified time period, often 30-60 days.

It's unsure how interest rates will move at any given time, but your lender may estimate where interest rates are headed. If interest rates are expected to be volatile in the near future, considering locking your interest rate to ensure you're still comfortable with the payment and can qualify with the locked rate. 

Even with poor credit getting a home loan is still possible. A lender will consider your loan to have more risk and to compensate for this they will charge you a higher interest rate, and maybe a higher down payment. 

Not necessarily, if you've been late with your payments less than 3-times in the past year, and the payments were no more than 30-days late, you still have a good change at getting a competitive interest rate. Most lenders will accept certain reasons for this like an illness, or job-change, but explanations maybe required.