Is the Best Home Loan Refinance the Lowest? Other Factors

When you are looking for the best home loan refinance, there are several things that you will want to take into consideration. Many people will simply choose the loan has the lowest interest rate and the lowest payment. However, there are some other factors for you to consider before making a decision.

Customer Service

One of the first things that you should consider is the level of customer service provided by the lender. While customer service is not the most important factor when deciding on a refinance loan, it should play a role in the decision. You want to work with a lender that will be easy for you to talk to if you have a problem. Some companies do not make it easy for customers to access them. If you can, choose a company that displays a high level of customer service.

Prepayment Penalty

Another factor in choosing your loan should be the prepayment penalty. If a home loan has a prepayment penalty with it, it can severely limit your options in the future. If you plan on moving or possibly even refinancing again, you might have to pay a substantial amount of money before you can do so. If you can find a home loan that does not carry a prepayment penalty, this would ultimately be in your best interest.

Length of Term

Something else that you will want to consider is the length of the loan term. If you have to take a different term than you are comfortable with in order to get a lower rate, it may not do you any good. For example, if the lower interest rate is on a 15-year mortgage instead of a 30-year mortgage, your payment is going to be substantially higher. It would not do you any good to get the loan with the lowest interest rate unless you can afford a higher monthly payment.

Closing Costs

When refinancing a home loan, you will also want to pay special attention to the closing costs on the loan. Closing costs can come to several thousand dollars depending on which lender you are working with. Many times, lenders that offer the lowest interest rates will make up for that by charging higher closing costs than other lenders. This means that you will want to pay special attention to the closing costs on a loan and make sure that the lender is not using them to make up for low rates.