Refinancing your mortgage
Home ownership is a major part of “the dream” that you worked hard to achieve. If you’re like most people than you probably assumed that the terms of your mortgage would stay the same throughout the duration of your mortgage.
You should probably refinance when rates are at all time lows like they are now. You ought to know everything that is involved in refinancing your home before you jump in head first.
When you obtained your first mortgage and when you refinance are very similar. All that happens is your current loan is paid off with a new loan. So exactly how do you refinance your home? Let’s dive in.
What’s The Point of Refinancing?
The most common reason for refinancing your home is simply to get better terms. When more favorable rates are available you usually get a lower your monthly payment. if interest rates drop 1% or more below whatever your current interest rate is then most people would save money by refinancing. Refinancing your home for a better rate can be a piece of cake, even if rates haven’t changed, if you simply have improved your credit score.
If you are faced with an unexpected large onetime expense that you may be unprepared for like a funeral, refinancing is a good option. It doesn’t make sense to pay high interest debts if you don’t have to so rolling them into the lower interest of your home will make for lower monthly payments.
The most important reason to get involved with refinancing your home is simple – saving money. By refinancing, you will actually immediately improve your credit score if your debt ratio is too high. Additional income can be freed up by simply lowering the minimum monthly payment on most of your bills. You will often qualify for lower interest rates on additional things like credit cards and insurance by using a home refinance to improve your credit score and to maintain a low debt to income ratio. Refinancing can be a strategic move toward simultaneously solidifying your credit and lowering all of your bills at once.
Shopping for a refinance can take a lot of work and can lower your credit score simply for the credit inquiry. A good mortgage broker will usually find you the best possible lending solution without the hassles. With a professional mortgage broker, reviewing your options will save you time and headaches and it is usually free.
What Is Involved In Refinancing Your Home?
You will need to complete basically the same steps because refinancing is so similar to the obtaining your original mortgage. When you first obtained a mortgage you needed to fill out an application, verify your income, obtain a credit check, verify the status of the existing mortgage, verify the property title and get an appraisal (depending on the loan to value this may just be a drive by appraisal) among other things. You’re going to have roughly the same requirements so this time around be prepared for that.
What Should I Look Out For First?
You first consideration should be your equity. To refinance, your lender will need some equity in the home to be present. Understand that refinancing your home may not be possible if you have no paid down some of your existing mortgage. However, even if you have not paid down your mortgage at all then you may have the required equity if your home has appreciated in value.
Make sure you consider all of the expenses going in because that’s the most important thing. there are closing costs for obtaining refinancing just like there was with your original mortgage. If you save less than the closing costs then refinancing for you wouldn’t make sense. However, for most people that isn’t the case.
If you’re serious about using a home refinance to lower your monthly bills, there’s only one way to know for sure to know what you will save. You will save you a lot of time, money and headaches by employing a professional mortgage broker. You should evaluate your options to save money because most brokers don’t charge anything to review this.