Refinance > Frequently Asked Questions
Refinance

Frequently Asked Questions

by Nancy Osborne, COO of ERATE®

Annual Percentage Rate (APR)

• What is APR and how is it calculated?

Appraisals

• Will the lender require an appraisal of the property? If so, will I receive a copy of it?

Closing Costs

• What type of closing costs can I expect to pay on my loan?
• Which mortgage related closing fees will the lender typically collect from me up front?
• Which closing costs associated with my refinance are tax-deductible?
• Is it best to pay points up front to reduce the interest rate?
• What is the difference between a zero point and a no cost loan?

Condominiums

• I am refinancing a condo (or townhouse or PUD) and am aware that our HOA is currently in litigation with the developer. Will I be able to refinance my loan?

Conforming

• What is the difference between a conforming and a non-conforming (a.k.a. jumbo) loan?

Finding An Agent

• Do I need the services of a loan agent/officer when applying for a loan?
• What is the best way to shop for a loan?

Flood Insurance

• Will I need to get flood insurance coverage to close the new loan?

Homeowner's Association

• I am refinancing a condo (or townhouse or PUD) and am aware that our HOA is currently in litigation with the developer. Will I be able to refinance my loan?

Homeowner's (aka Hazard) Insurance

• How much Homeowner's insurance coverage will I need to close the new loan?

Insurance

• What is the best way to shop for insurance?
• How can I avoid having to get mortgage insurance on my loan?
• How much Homeowner's insurance coverage will I need to close the new loan?
• Will I need to get earthquake insurance coverage to close the new loan?
• Will I need to get flood insurance coverage to close the new loan?
• Why do I need to pay for another policy of title insurance when we already own the property and purchased title insurance when we bought the house?

Investment/Rental Property

• When refinancing investment or rental property, what is the difference in rate for non-owner occupied vs. owner occupied financing?

Jumbo

• What is the difference between a conforming and a non-conforming (a.k.a. jumbo) loan?
• What is a super jumbo loan and how much higher (than the average jumbo loan) is the interest rate typically?

Loan Documentation

• What documentation will the lender typically require to process my loan?
• Are there limited documentation (a.k.a. EZ doc, no income qualifier) loans available?

Loan Process

• Do I need the services of a loan agent/officer when applying for a loan?
• What is the best way to shop for a loan?
• What documentation will the lender typically require to process my loan?
• Are there limited documentation (a.k.a. EZ doc, no income qualifier) loans available?
• How can I avoid having to get mortgage insurance on my loan?

Loan Selection

• What is the best way to shop for a loan?
• What is the most important consideration when selecting a loan?
• How do I determine which loan program is best suited for my personal situation?
• What is a loan prepayment penalty and is it generally advisable to get a loan that has one?

Mortgage Insurance

• How can I avoid having to get mortgage insurance on my loan?

No Cost Loans

• What is the difference between a zero point and a no cost loan?
• Is it possible to obtain a no cost loan when refinancing your mortgage?

Points

• Is it best to pay points up front to reduce the interest rate?
• What is the difference between a zero point and a no cost loan?

Pre-Payment Penalty

• What is a loan prepayment penalty and is it generally advisable to get a loan that has one?

Project/Complex Litigation

• I am refinancing a condo (or townhouse or PUD) and am aware that our HOA is currently in litigation with the developer. Will I be able to refinance my loan?

Quake Insurance

• Will I need to get earthquake insurance coverage to close the new loan?

Rates

• When refinancing investment or rental property, what is the difference in rate for non-owner occupied vs. owner occupied financing?
• Should I lock my interest rate at loan application or float the rate until closing?
• Will the lender require a fee to lock in my interest rate?
• If I decide to lock my interest rate and rates go down, will the lender give me the current lower rate?

Rate Locks

• Should I lock my interest rate at loan application or float the rate until closing?
• Will the lender require a fee to lock in my interest rate?
• If I decide to lock my interest rate and rates go down, will the lender give me the current lower rate?

Should I Refinance

• How do I know if it makes sense for me to refinance?
• I've always heard about the 2% rule when refinancing, is it important?

Super Jumbo

• What is a super jumbo loan and how much higher (than the average jumbo loan) is the interest rate typically?

Tax Considerations

• How do I find a qualified, reputable CPA?
• Which closing costs associated with my refinance are tax-deductible?
• Is it best to pay points up front to reduce the interest rate?

Title Insurance

• Why do I need to pay for another policy of title insurance when we already own the property and purchased title insurance when we bought the house?

Townhomes

• I am refinancing a condo (or townhouse or PUD) and am aware that our HOA is currently in litigation with the developer. Will I be able to refinance my loan?

---

Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.