Refinancing your mortgage can be one of the best ways to save money. Refinancing can replace your current home loan with one that has a lower or fixed interest rate or a longer payment period that reduces your monthly bill. Refinancing has its complexities, but most homeowners don't need the services of an attorney to navigate the process.
When you refinance on your own, without the assistance of a real estate attorney, you save the money a lawyer would charge for what might amount to nothing more than some advice and administrative tasks. The refinancing process still isn't free; lenders charge fees when you sign up for a new loan, and your old mortgage may have a prepayment penalty that you'll need to pay when you transition from your old mortgage to the new loan. If you choose to employ a mortgage broker, you'll need to pay a commission fee as well. This makes foregoing an attorney one way to keep the costs of refinancing under control.
The Refinancing Process
When you refinance without an attorney, the first step is to examine your current mortgage. Determine whether it includes a prepayment penalty and figure out what your interest rate is. If you have an adjustable-rate mortgage, determine how close you are to the maximum interest rate and how soon your lender could raise your rates. The next step is comparing new mortgages, which is very much like the process of shopping for your original mortgage. Because refinancing is so similar to getting a mortgage, you're even more likely to be able to move through the steps without an attorney's assistance.
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Sources of Help
Refinancing without an attorney doesn't mean you'll be on your own to refinance your home. If you go through a broker who will charge a commission but be able to show you mortgages from many different lenders at once, you'll have a personal point of contact who can negotiate on your behalf and explain the differences between refinancing options. Even if you don't use a broker, the lenders you approach should be able to explain their products and answer questions about how the new loan differs from the mortgage you already have. A financial planner can also help you make refinancing decisions as the new payment schedule will affect your household budget, retirement saving and investment goals.
One situation where you may want the services of a lawyer is if you suspect you're being targeted by a refinancing scheme. Such schemes prey upon homeowners facing foreclosure. They generally come in the form of unsolicited phone calls or mailers that offer a reduced interest rate. Refinancing scams usually require an upfront fee or don't explain the costs and fees associated with refinancing. An attorney with experience in real estate law can help you examine a refinancing offer and determine its legitimacy, saving you from an offer that will charge fees but never offer any real relief.