Ask the lender or broker for a comparison of the up-front costs, principal, rate, and payments with and without this rate trade-off.
Stick with a simple loan. It is easier to understand and less likely to get you into trouble. Adjustable-rate mortgages may seem like a way to get a bigger house now or to keep more money now, but when the rates adjust you can get into trouble. Avoid anything with a balloon payment. Just choose a simple 30-year mortgage you can easily afford.
Closing costs can be expensive. If you plan on refinancing your home to save money, be sure to take into consideration how much the closing costs on the new loan will cost you.
If you plan on moving out of your existing home within the next few years, it may not be beneficial for you to refinance. Make sure you let your mortgage specialist know your future plans.
Give yourself plenty of time to close. With most refinancings, your file is turned over to a closing or title company, which dictates the closing details. Like the lenders themselves, these firms are swamped when interest rates are low. Moreover, appraisers get backed up and can be difficult to schedule. So don't expect the closing to happen as quickly as anyone promises.
