Q-Where can I get a list of lenders offering mortgages at no points and with no closing costs?
A-To refinance or obtain a new mortgage, let your fingers do the walking. Get out the Yellow Pages and look up banks, mortgage bankers or savings and loan associations.
Make your telephone call to the lender of choice; ask to speak to a mortgage loan officer. The loan officer can provide information on the types of mortgages available, current interest rates and points, if any, as well as closing costs.
You may have to call several lenders to find one offering a “no points, no closing costs” mortgage loan for refinancing your existing mortgage. They are available, so a little searching will pay off.
11th-hour switch
Q-I’m in the process of refinancing with an FHA mortgage. The closing is set, but can I stop it and find a lower rate? Is there a penalty or fine?
A-A mortgage lender cannot force you to close your mortgage loan. Before canceling the refinancing, you should be aware that you may forfeit all or part of any loan application fees paid to the lender. Additionally, you may be liable for costs the lender has incurred in your behalf.
Also, if a “lock-in” agreement has been signed, you are subject to being sued for specific performance. This, however, is unlikely.
Deciding to refinance
Q-I was told a few months ago that I shouldn’t refinance until the rate is 2 percent below my current loan. Is this still true?
A-The decision to refinance should be based on three factors: How long do you plan to live in your current home? What are the total costs of refinancing? What is the difference between your old and new (refinanced) mortgage payment?
This formula may help: Divide your total costs of refinancing by the difference between your old and new mortgage payment. For example, if the costs were $2,500, and your old payment was $600 a month and your new payment will be $500, divide $100 into $2,500. The answer is 25, which is how many months it will take to recover the cost of refinancing.
In short, if you plan to live in your home long enough to recover the costs of refinancing, go ahead and refinance-even if the difference in interest rates is less than 2 percent.
