The current low-interest rate market has created extraordinarily attractive opportunities for refinancing. Some borrowers, however, will make better use of the opportunity than others. This article sets out what a borrower needs to know to make the right decisions on whether to refinance, how to refinance, where to refinance, and how to remedy a poor choice by rescinding a refinance.
The obvious criteria is the interest rate the applicant can find in the market relative to the rate on her existing mortgage. This is complicated, however, by refinancing costs which are out-of-pocket unless the applicant has the lender pay them, in which case the new interest rate will be higher than it would have been otherwise. Such lender payments are termed “premiums”.
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