Things to Consider Before Closing the Mortgage
Now the date has arrived and finally the house of dreams is yours where homebuyers and sellers sign the dotted line, exchange the checks and finally the keys are yours. But in reality it is not always possible and your closing could be a disastrous. Before that magical day arrives a long list of things could be happen so be cautious. Buying a home is a major transaction and successful deal depends on many factors.
Here are few tips that ensure that your closing should goes smoothly.
Complete all your paperwork: Make sure you get all your paperwork get completed and on schedule as well. Delays cost you more money. Every loan is different and is bound to different conditions. A VA loan for a purchase will require you to provide different paperwork than an FHA loan.
Be prepare for unexpected: You are at a closing table and you are sure that everything is going great and all you need to do is just to sign the papers. So you must double check the numbers on the mortgage note before signing, even if you have received the HUD-1 form before closing. Sometimes you have to correct the interest rate or the amount is wrong and you have to fix it. So be prepared your loan payments may need to be sent back closing for earlier and don't wait the last day on the contact to close.
Open an Escrow account: Escrow is an account held by a third party on behalf of two parties in a transaction. There are so many things that one should consider for completing a home sale and the best way to prevent buyer or seller is to have a neutral third party which holds all the money and documents related to all the transactions until the whole process has been settled.
Negotiate the closing costs:Whosoever you are whether a borrower, a lender a buyer or a seller all you just need is the assurance that your funds and property must be in safe hands. The escrow holder has the duty to safeguard the funds as well as the documents which are in its possession. The escrow companies won't provide their services for free and many of them even take the advantage of consumer's ignorance and thus charge junk fee in addition to various other types of fee like administrative fee, application review fee, appraisal review fee, settlement fee etc. But if you have good prior knowledge then you can surely get your junk fee eliminated or at least reduced.
Complete the home inspection: A home inspection is not required. But you can perform it and if finds a serious problem with the home during the inspection you have an opportunity to back out of the deal or ask the seller to fix it or pay for it.
Final walk through: One of the major step before signing your closing papers walk through the property one last time and make sure that no damage has occurred and nothing has been removed that is included in the purchase.
Mortgage Refinance with No Closing Cost
No-Cost Refinance is one with an interest rate high enough that the lender's discount or rebate covers the closing costs. Rebates or discount points are negative points. Lenders charge points on low-interest rate loans and pay them on high-rate loans. For example, on a 30-year fixed-rate mortgage, they might quote 6.75% with 2 points, 7.25% with zero points, and 8% with a 1.5-point rebate. If the 1.5 point rebate covered the settlement costs, 8% could be the no-cost rate. In such cases, the borrower taking a no-cost refinance is paying the settlement costs in the rate. If he pays off the mortgage in a few years, it's a good deal. If he has it a long time, it is a costly deal. In sum, No cost refinancing usually means that the lender agrees to pay all normal closing costs when refinancing a mortgage. Some of these costs include the loan origination fee, appraisal fee, credit report fee, attorney's fees and title fees. One reason to consider no cost refinancing might be because of job loss or a job change resulting in lower income. Current monthly payments may be too high to maintain and as a result payments are late and charges are mounting up. Late payments are resulting in a lower credit score and credit history is being damaged. Damaged credit history will mean paying higher interest and fees for future purchases. To avoid damage to credit consider refinancing with a lower interest rate. This should also result in a lower monthly payment and shorter payoff terms.
Reasons to choose a No Cost Loan or No Cost Refinance:
* You are not sure how much longer you will stay in the house or you may be relocated within 3 -5 years.
* Your loan balance is > $200,000
* You are not sure how much longer you will stay in this new mortgage. In some states, the average loan pays off in less than 4 years. It typically takes 4 to 6 years to recapture closing costs if you decide to pay them when refinancing your home. Remember that you don't just refinance to get a lower rate. It could be for a medical emergency, college education for your children, to remodel the house etc.
* You believe that there is a chance that rates might go lower in the future. If they do, we can refinance you once again with no costs.