Rates are down and many people are refinancing their homes.  People refinance for several reasons.  The following is a list or common questions I get asked when talking to people about refinancing their home.

1.  Are there costs associated wtih refinancing?  Yes. The cost to refinance can be paid out of pocket by the homeowner, added into the loan amount being borrowed or paid by the lender.

2.  How does the lender pay the closing costs?  By charging you a higher interest rate than you would have received had you paid your own closing costs.

2.  How much are the costs?  Refinancing costs anywhere between $1,500 and $3,000 depending on the loan amount.  This does not include points and or setting up an escrow account if you elect to do so.

3.  Can I borrow more than I currently owe?  You can provided you have the equity to do so.  An appraisal will need to be done and you can generally go up to 90% of the appraised value.  If you go above 80% of the appraised value you will be obligated to pay Private Mortgage Insurance and escrow for taxes.

4.  Do rates vary depending on the reason for the refinance?  Yes, rates will vary based on your credit score, the loan to value ratio and whether its a "rate and term" or a "cash out" refinance.  A rate and term refinance carries the lowest rate and is only used to finance your current mortgage and closing costs.

5.  How long does refinancing take?  Approx. 30 days