Mortgage refinance often comes with added costs, but you can still save money. Although closing costs and refinance fees add on to the total cost of the loan, you can lower your mortgage payments each month. With careful planning, the various options available to you can pay off by offering you ways to lower refinance fees.

Streamline Refinance

Streamline refinance involves fewer or lower loan fees, flexible underwriting guidelines, and less paperwork. If you've been a good customer and have always paid your monthly mortgage payments on time, your lender may be willing to lower or do away with some of the refinance costs. Fewer loan fees save you money, and less stringent underwriting guidelines make it easier to qualify. Many lenders offer streamline refinance programs that also cut the time it takes to get the loan through. The key criteria is that the refinance will benefit you.

Automated Valuation

Not all refinance loans require an appraisal of the property. To save you the cost of paying for a full appraisal, your lender may be willing to do an automated valuation to estimate the value of your property, especially if you are refinancing with the original financial institution. With an automated valuation, the lender can get a report quickly and at lower cost to you.

Instead of sending a real estate appraiser to examine your property, an automated valuation service uses a mathematical model based on data available at the time. Automated valuations compare the values of similar properties and take into account your property's sales history and the tax assessor's value. It does not consider the condition of the property in determining its value.

Converting an Adjustable-Rate Mortgage

Refinancing to a lower fixed interest rate if you currently have an adjustable-rate mortgage (ARM) is another reason to refinance. Even with paying the additional refinance fees you can save money, especially if with your next periodic adjustment, your rate will adjust to a higher rate than you initially paid on your ARM. Even a 1 percent drop in the interest rate you pay can reduce your monthly payment and help build equity in your home faster. The more the outstanding principal on your mortgage, the better that rate drop will look.

No-Cost Refinancing

Although no-cost financing means you don't have to pay loan refinancing fees up front, you still pay them in the end. That is, unless a lender waives all the fees, which usually doesn't happen. How it normally works is the lender rolls the refinance costs into the loan. Even though you will pay a slightly higher interest rate, if that rate is lower than the current rate you pay, no-cost financing may still be to your advantage.

If you don't have the cash to pay the fees up front, it gives you the opportunity to go ahead and refinance, especially if a lower monthly rate will save you money over the term of the loan. Also, if you don't intend to remain living in the home for more than five years, you may not want to put down a chunk of your money on refinance fees, particularly if it will take more years than that to recoup the costs.

For more information on refinancing, contact a company like Liberty Escrow Inc.