If you are concerned about getting a mortgage to purchase a property or refinance one, you will almost certainly end up with several offers from competing lenders.
There are many terms to contrast between them.
A basic comparison is how much your closing costs match up to your total cash taken out from a refinance. Clearly you are hopeful for your closing costs to be a small fraction of your cash out.
Your mortgage offer (in the form of a good faith estimate) ought to contain some or all of the following factors:
- New Loan Note Rate
- New Total cash out
- New Loan Amount
- New Regular Monthly Payment
- Loan Length (Years)
- New Total payments over time
- New Interest Only Payment
- New Total interest paid over time
- New Loan Total Closing costs
Remember that the offers you receive from different lenders are simply estimates, not guarantees, of interest rates and closing costs. You can use this to compare your total closing costs as percentage of your refinance cash out. This will put the whole deal in perspective. You can decide if you are paying too much.
One technique borrowers use to decrease their closing costs is to accept a higher interest rate. This is using a "no closing cost option" which frequently means trading no closing costs for a higher interest rate. If receiving the maximum cash out is your priority this may be the choice for you.
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