Top Tips for Mortgage Refinancing | Florida Capital Bank

Are you paying more than you should be for your mortgage? Could mortgage refinancing get you significant savings? The fact is that 20% of homeowners that could benefit from mortgage refinancing do not take advantage of it. They are leaving a lot of money on the table.

Since 2008, interest rates have been at all time lows. With an improving economy, interest rates are predicted to rise in 2015. Once interest rates start to go up, they will likely never return to today’s levels. If you have a mortgage with a higher interest rate, you may be in a good position to take advantage of mortgage refinancing while interest rates are still at rock bottom levels. It is easy to get intimidated by the refinancing process. Don’t let that keep from refinancing your mortgage. Here are some tips on mortgage refinancing:

Do the Math

The rule of thumb is that if you can reduce your interest rate by 1% or more, then refinancing is a good deal. This may not necessarily be the case. You might be able to save money with smaller reductions of your interest rate.

To determine your savings, you want to look at the total cost of your current mortgage. Multiply your monthly payment by the number of months left on the mortgage to find the total cost to you. Do the same with any refinancing offers. Be sure to include any fees in this number for the new mortgage.

Make sure that you are not simply lowering your monthly payments by extending the term of the loan. This does not represent a real savings. In fact, you might consider loans with shorter terms that do not lower your payments. You will save money because the loan will be paid of sooner with less interest.

Consider No-Cost Refinancing 

Many lenders offer to absorb the closing fees associated with a loan in exchange for a higher interest rate. This is not a great choice if you are going to be in your home for a long time, or if you are not very far into your mortgage. The higher interest will add up in the long-term. But if you are planning to move in the near future or are near the end of the term of your mortgage, no-cost refinancing could lower your interest rate enough to realize some savings without incurring the heavy closing fees. The interest you pay in the short-term may be less than the closing costs so you are saving money.

Shop Around for the Right Lender

The credit market is really tight right now so it may be difficult to find a lender willing to refinance your mortgage. There are also bad lenders out there that will harass and cause problems for you. Make sure you shop around to find the best deal from the right lender.

Expect Piles of Paperwork

The mortgage refinancing process will drown you in paperwork. Make sure you have all your ducks in a row and be prepared to provide whatever is asked. You will need tax returns, pay stubs, bank statements and any other proof of income that you have. Lenders are going to want a lot of documentation before they give you a loan even if you have good credit and a strong income history.

If your mortgage has a higher interest rate, now may be your last chance to refinance it before rates go up. Don’t be deterred by the refinancing process. If you can realize significant savings, the process will be worth it.


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