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Choosing a mortgage depends on your wants and needs. Regardless of your
reason for refinancing -- be it to lower monthly payments or build equity faster
-- you should contact several mortgage lenders. Start with your original lender
and then contact several more to compare mortgage types, rates, and terms.
Lenders will likely vary in their costs and fees. Our Find a Lender Search tool
helps you locate a Fannie Mae-approved lender in your area, so you can learn
more about the variety of Fannie Mae mortgage products that help you refinance
your mortgage.
In our Is Now a Good Time to Refinance? brochure (PDF), you'll find
checklists of mortgage shopping terms and lender-comparison charts. These charts
can help you understand what type of questions to ask lenders and will help you
to keep records of the information you gather.
Lenders offer a wide range of interest rates and terms. You can lower your
rate by paying discount points. A lender may offer, for example, a 6.75 percent
mortgage with one point, or a 7 percent mortgage with no points. Typically, the
lower the interest rate, the lower the monthly interest payment (depending on
the mortgage term), but to keep up-front costs down, you may choose a higher
rate with a no points option. In addition, many lenders may allow you to finance
points and closing costs as part of the total loan amount -- called a no-cost
refinance.
The type of mortgage you select primarily depends on how long you plan to
live in your home, your reasons for refinancing, and the amount of monthly
payment you can comfortably afford.
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