Comparing Refinancing Costs

By Karen Lawson Columnist

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You've seen ads for no-cost refinancing. You can get a great deal on home mortgage refinancing, but it's important to compare costs by reading documents carefully and checking the APR for the loans you're considering. With a wide variety of mortgage loan options, you can likely find affordable refinancing.


Understanding the Difference between APR and Interest Rate

Mortgage lenders offer many home refinancing products. Low interest, no closing costs, no appraisal coststhe list goes on. The key to determining the actual cost of refinancing is the APR, or annual percentage rate. Federal law requires lenders to accurately state the cost of a mortgage loan as an annual percentage rate, which makes it easier to compare the true costs of loans with different rates and fees. The difference between the APR and the stated annual interest rate is that the APR includes lender fees and charges along with the interest rate. APR is found on a Truth-in-Lending (TIL) disclosure and provides a more accurate picture of what refinancing will actually cost.

Shopping for the Perfect Refinancing Option

As with any major purchase, you want refinancing that enhances your lifestyle without breaking your budget. Depending on your reasons for refinancing and how long you intend to stay in your home, you can find refinancing that provides financial flexibility while helping you achieve your goals. If you are planning to sell your home within a few years, a low interest adjustable rate mortgage may provide the cash flow you need at a lower cost. If you're ready to retire, you may want the security of a fixed rate mortgage. It's a good idea to have a list of questions for mortgage lenders. Comparing mortgage terms and the APR for several loans can help you find refinancing best suited to your needs.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.

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