Finance Roll

Refinancing your mortgage can save you a lot of money if done correctly. There are a number of costly mistakes homeowners make when refinancing that result in significantly overpaying for the new loan. Rolling your closing costs into your mortgage can be one such mistake. Here is mortgage refinance information and tips you need to consider before rolling closing costs in with the balance of your new mortgage loan.

Mortgage Refinance Information: Financing Your Closing Costs

If you are a homeowner without the necessary down payment to purchase your home, you can finance this amount with an 80/20 or piggyback loan. If you are using this type of financing to purchase your home, chances are you do not have cash on hand for the necessary closing costs. Many lenders offer the option of rolling these closing costs into your new mortgage balance. This is also true for homeonwers refinancing their mortgage loans.

Mortgage Refinance Information: Why You Might Not Want to Pay Closing Costs for the Next Thirty Years

When you roll your closing costs in with the loan principle, the mortgage lender will charge you a higher interest rate for the financing. This higher rate, along with the additional principle could raise your monthly payment amount by as much as $100. Over a period of just five years you will overpay $6,000 to the lender, just to save $3,000 at closing. Any advantage you gain from refinancing the mortgage evaporates the moment you agree to finance your closing costs.

Additional Mortgage Refinance Information

You can get more mortgage refinance information, including other costly mistakes to avoid by registering for a free mortgage guidebook.