This Proposed Change Could Save Mortgage Refinancers a Fortune

Because mortgage rates are high right now, it's not the best time to refinance a home loan. But in time, those rates are apt to come down. And from there, refinancing a mortgage could make sense for a large number of buyers, from those seeking to lower their monthly payments to those looking to take cash out of their homes for renovations and repairs.

The problem with refinancing, though, is that it can be expensive. That's because mortgage lenders charge closing costs to finalize a refinance. But now, President Biden is seeking to eliminate one fee that tends to make closing costs for refinancing expensive. And that could lead to a world of savings for those seeking out new mortgages.

Bye bye, title insurance fees

You may hear about title insurance in the context of buying a home or refinancing the loan on a property you own. When you buy a home, the title on that property must pass from the buyer to the seller. And the title is supposed to show that the seller in question owns the home legally. Title insurance, meanwhile, protects buyers from issues related to a home's title after they've taken ownership of a home.

When you buy a home, a title search and title insurance are expenses you have to cover as part of your closing costs. The same holds true when you refinance a mortgage. But now, President Biden is seeking to get rid of title insurance fees for certain refinances.

In his recent State of the Union address, Biden said, "My administration is also eliminating title insurance {fees} on federally backed mortgages. When you refinance your home, you can save $1,000 or more as a consequence."

Other ways to save on a mortgage refinance

Biden's plans could clearly do a world of good for mortgage refinancers. But there are other steps you can take to lower your costs in the course of refinancing.

First, shop around. Getting quotes from multiple refinance lenders could help you identify the best deal you're eligible for. And don't just look at refinance rates when you do your shopping -- also consider the closing costs you're being presented with.

Additionally, don't hesitate to negotiate certain aspects of your closing costs. You may, for example, be able to get your lender to come down on your application or appraisal fee.

Finally, do your best to boost your credit score before you apply to refinance your mortgage. The higher your score, the more attractive an interest rate you're likely to get.

If you're hoping to refinance your mortgage in the near term, do know that waiting until later on in 2024, or until 2025, could leave you with a more favorable interest rate on your new home loan. That's because the Federal Reserve has signaled that interest rate cuts are in store for later this year and next. And while the Fed doesn't set mortgage refinance rates directly, when it lowers its benchmark interest rate, the cost of borrowing tends to drop across the board.