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When is refinancing your Spokane mortgage bad for your financial health?

If you were not watchful and let a prepayment penalty clause slip into your original mortgage contract, you must take this into consideration.  Be sure to take the prepayment fees out of your estimated Spokane refinancing savings to calculate whether you should refinance. In addition don’t refinance if you are intending to move in several years time.  The reason for this is that you will usually not break even as a result of the fees that result from refinancing.

What about your finances? Just because you qualified for a home loan doesn’t necessarily mean you can refinance.  If you have taken on a lot of credit card debt in the past few years, your loan to value ratio may have increased, making it difficult for you to obtain refinacning on your Spokane house.

In the final analysis, how will a Spokane refinancing loan run you? With such a wide variety of fees, it can be difficult to come up with an exact percentage, but most mortgage brokers in Spokane, Washington will charge around 5% of your existing principle to complete the refinance.

Application fees are usually seperate and will run around $200, and they are usually not refundable.

Other fees you have to think about when refinancing your Spokane mortgage loan include an orgination fee, which will run about 1% of the principle on the loan. Vary other points may also take affect which can end up being 3% of the total amount.

If you have decided on a home equity line of credit, you will also need to have your home appraised. In order to have an unbiased inspection of the property, most banks will want to send their own people.  The fee to have your Spokane home appraisal will typically range from 400 to 800 dollars, and the home lender may also require a full Spokane inspection of the residence, which is usually conducted by a property inspector.

Most banks will usually use a Spokane lawyer to look over the final refinancing contract, and this fee will run around $1000.  Another fee schedule you will have to consider is that of homeowners insurance. You should purchase it anyway to protect yourself, and most lenders will require you to have it to protect the house itself. Fees for this will run as low as $500 a year.

Due ot the risk of liens or you not actually owning the property, a Spokane mortgage lender will assess title insurance as part of their fees. If the bank makes a unwise decision with regards to lending, the insurance company will compensate them, which will run around $800.

Another fee which may or may not be charged are Spokane surveyor fees, where the bank will require a professional surveying team to come out and measure out the exact boundaries of the property.

What about no fee refinancing? Is it a gimmick? Usually so, as the lender will just roll these fees over into the new mortgage, which will add to the amount of principle that you will eventually have to pay.  Paying the refinancing fees now will result in lower payments down the road, as you are not paying interest charges on those fees over the lifetime of the loan.

So how do you calculate whether you can benefit from a lower Spokane mortgage rates?  There are plenty of mortgage calculators online, but the basics of determining whether refinancing is best involves calculating your current mortgage payment and then subtracting the new mortgage payment.  This is the amount of savings per month that you will receive from refinancing. Also take away any taxes, because your mortgage savings aren’t tax deductible.

Now you must take your refinancing charges and divide by monthly savings to see how long it will take to break even. For example if you save 100$ a month and fees came out to $2000, it would take 20 months for you to start saving.  Usually this will come out to around 3 years, although it will really depend on the difference in interest rates.

Is Spokane home refinancing right for you? Who should you first talk to in order to start the refinancing process?  Your current bank probably doesn’t want to lose all the interest you would be paying them to another bank, so talk to your existing bank first.  You can save on paperwork since the bank has all of your info on file, and the application fee may be waived, in addition to a number of other fees.

Never fail to shop around at other Spokane banks, even if you like your existing bank as it pays to shop and compare.  As well, before you make any payments, besides the application fee, have any promises made in writing so that the lender cannot back out later.

Online comparisons have also become an effective way to compare various Spokane mortgage rates, as it requires no loan broker and little time.  Your local newspaper is also a good local resource in order to compare terms and rates of various companies.  Stay away from telemarketers and direct mail, as these offers are usually gimmicks and the actual interest rates that you will be charged are quite high. 

Your Spokane mortgage is most likely your biggest liability, so take care when choosing to refinance anything. Always do plenty of research on rates, fees, and other options which a lender can offer you.  No doubt you have many questions about Spokane refinancing that have not been addressed in this article, so be sure to ask your financial advisor whether this option can save you money over the long term.

To discover additional info about Spokane Property check out my Spokane Mortgage Rates web page.

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