#81 MORTGAGE REFINANCE Buyer Checklist You Need To Know Before You Spend Your Money. 40 Buyer-Beware Intelligence Points.

Financial Information Notice: This checklist provides general educational information only. It is not financial, mortgage, tax, or legal advice. Mortgage terms, costs, eligibility requirements, tax treatment, and laws vary. Verify current terms with qualified professionals and official sources before making a financial decision.

“A lower mortgage payment doesn’t automatically mean you got a cheaper mortgage.”

CFPB notes that refinancing replaces an existing mortgage with a new one and generally involves closing costs and fees. A lower payment can also result from extending the loan term, which can increase total interest paid.

25 Buyer-Beware Warnings

1. ☐ Don’t compare only monthly payments.
2. ☐ Calculate the new loan’s total cost.
3. ☐ Calculate refinancing costs.
4. ☐ Determine whether the term is being extended.
5. ☐ Compare remaining interest on the current loan.
6. ☐ Compare interest on the proposed loan.
7. ☐ Check the new interest rate.
8. ☐ Check whether the rate is fixed or adjustable.
9. ☐ Identify points.
10. ☐ Identify lender credits.
11. ☐ Identify appraisal costs.
12. ☐ Identify title costs.
13. ☐ Identify other closing costs.
14. ☐ Check whether costs are being financed.
15. ☐ Don’t assume “no-cost refinance” means free.
16. ☐ Calculate the break-even period.
17. ☐ Estimate how long you expect to keep the loan.
18. ☐ Check prepayment restrictions where applicable.
19. ☐ Consider whether cash-out changes the economics.
20. ☐ Compare multiple lenders.
21. ☐ Obtain written estimates.
22. ☐ Compare equivalent loan structures.
23. ☐ Don’t let a lower rate hide higher fees.
24. ☐ Don’t ignore taxes/insurance changes.
25. ☐ Calculate the outcome under multiple holding periods.

CFPB explains that “no-cost” refinancing can mean either accepting a higher interest rate in exchange for lender credits or adding closing costs to the loan balance.

Premium Checklist

1. Current Mortgage

☐ Current balance
☐ Current rate
☐ Remaining term
☐ Current monthly principal/interest
☐ Remaining interest estimate
☐ Prepayment provisions

2. Proposed Mortgage

☐ New balance
☐ New rate
☐ New term
☐ Monthly payment
☐ Points
☐ Lender credits
☐ Closing costs

3. True-Cost Calculation

Total Refinancing Cost = Closing Costs + Added Interest + Financing Costs − Savings

Then calculate:

Break-Even Months = Total Upfront Refinancing Cost ÷ Monthly Savings

4. Scenario Testing

Run:

☐ 1-year scenario
☐ 3-year scenario
☐ 5-year scenario
☐ Expected holding period
☐ Early-sale scenario