Refinancing - Frequently Asked Questions

Refinancing your mortgage loan to a lower rate is almost always advantageous. Lowering the rate reduces the amount of interest paid on a periodic basis, and allows homeowners to either reduce their monthly payment or shorten the time over which they pay their mortgage. To make the correct decision on whether, or when, to refinance, you should consider the following:

1. When should I first consider refinancing?

(Typically, saving a Half-point (0.50) or more will significantly reduce your mortgage payment). For example, for every Hundred Thousand Dollars outstanding on a 30 year loan, saving a Half-point (0.50) will save you approximately $35.00 a month ($420.00 per year) in interest payments. The savings goes straight to you with no closing costs involved. Over 30 years, the total savings exceeds $5,000.00 for every $100,000.00 borrowed.

2. Why would I ever pay money out-of-pocket on a no-points/no-costs loan?

This is a factor of how much you borrow, and should be calculated carefully. The amount needed to payoff your current loan is not simply the amount of the principal balance after the last mortgage payment, but also includes accrued interest through the date of the payoff. To borrow the correct amount, determine your principal balance following your last mortgage payment and add the daily interest to arrive at the proper payoff figure. Your loan specialist can help you determine the daily interest figure. The amount you borrow should be carefully reviewed with your lender prior to locking your loan amount and rate.

In addition to your loan payoff, you will likely contribute toward a new escrow account for property taxes and insurance. The money paid toward these escrows is typically refunded back from your prior lender after the closing.

3. How long to I have to wait before refinancing?

Typically, the bank will determine how soon you can refinance your mortgage after your home purchase or last refinance. One important consideration is whether your current loan has a Prepayment Penalty. To determine this, check the loan documents [the NOTE] from your current loan to determine whether a prepayment penalty applies.

4. Do my spouse and I both have to attend the closing?

Parker|Scheer LLP has developed a program that typically allows us to accept a Power of Attorney from one spouse to the other to sign all the closing documents.

5. How can I find out more about current mortgage rates?

You can call Rob Stewart directly for a referral to one of our affiliated mortgage lenders or for answers to any other questions you may have in connection with your home loan.

Download this document in Word Format

Contact a Massachusetts Real Estate Lawyer

For more information on refinancing a mortgage, or if you are looking for a real estate lawyer in Massachusetts, please contact Rob D. Stewart. If you prefer, you can also telephone our offices in Boston seven days a week at toll free 866-414-0400.

Related Articles

Parker | Scheer - Massachusetts Real Estate Lawyers

Buying a house in Massachusetts

Reviewing Mortgage Documents

Massachusetts Real Estate Legal Resources