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What do I need to know about refinancing?

The good news for homeowners in New Jersey is that home prices are up 5 percent in the past year. Mortgage interest rates are still reasonable, as well. As of the time of this writing, a 15 year home loan, which is popular for homeowners looking to refinance, is being offered at around a 3.13 percent interest rate (your specific rate may vary and is subject to change). If you are a homeowner, therefore, you may be wondering if refinancing is right for you.

Refinancing a home is a personal decision that should take into account your current finances, expenses and future financial needs. However, it is a good time to refinance. And in some respects, refinancing is easier than it has been before.

Homeowners taking advantage of equity

Lowering your monthly payment or paying off the balance more quickly may not be the only goals of a home refinance. You may also benefit by gaining from the acquired equity in your home (the fair market value of your home, minus the outstanding mortgage balance). By refinancing, you can get cash to undertake home renovation projects that further increase the value of your home or pay for other things like medical bills or a vacation.

The role of an attorney in refinancing

You are in the best position to decide if refinancing is right for you. If you do choose to refinance, however, it is important that you know all of the legal rights and obligations associated with refinancing. Lenders, for example, may try to steer you away from getting an attorney by suggesting their own title company. However, this can result in steeper fees such as a mandatory "settlement fee," which they may or may not disclose to you. It also means you do not have anyone dedicated to your interests on your side when signing the loan.

By having your own attorney, you can be sure that you fully understand the provisions and terms of your new mortgage. In addition, your own attorney will ensure the previous mortgage is properly discharged. Failing to properly discharge the previous loan can affect your credit score and may lead to issues if you try to sell the home.

The bottom line is that hiring an attorney will provide a clear title for the future sale of your home and protect your rights as you take advantage of the value of your home.

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