Whether you want change up your payment schedule, cash in on some equity, get a better interest rate, or just save some money, knowing how and when you should refinance your home is worthwhile skill. When you refinance, you’ll be using the new loan to resolve your old one, and the process may be easier than your original mortgage loan. Still, there are some key points to pay attention to as you consider refinancing.
Refinancing isn’t something you go into blindly, of course. The first piece of information you want to arm yourself with is your credit score. This will give you a better idea of what loans are available to you. Even if your credit isn’t that great, there’s still a chance you could get a deal that serves you favorably.
From there, it’s time to assess your overall financial status, and what you hope to get out refinancing.
You might find that your current lender is worth sticking with, but you should still inquire about your options with other lenders. One of the best refinancing tips out there is that you should be very wary of any lenders that come to you; you should only seriously consider those that you reached out to first, or have done business with before.
In any case, make sure your current lender knows you’re looking to refinance. They could go the extra mile to keep you with them.
Ready to apply? Not so fast. Like many other areas of finance, refinancing your mortgage can come with fees that perhaps you weren’t quite prepared for. The exact rundown will vary from lender to lender, but they can include the cost of appraising your home, checking your credit, processing, and more.
So before you agree to go with a certain lender, ask specifically about the fees associated with using them, and add all of these up for comparison.
Now, it’s finally time to apply. The good news is that you might not have to do so much paper work yourself, as loan officers often take the reins on the actual documents. However, you will need to be prepared to provide plenty of documents of your own.
Any financial documents you have involving accounts and investments will be necessary, as well as thorough employment and income documentation.
As you move along the process, it’s important to leave well enough alone – when you close, the lender will double check to make sure that your income and credit are still as they were at the time of application. Then, you need to determine if your loan is going to lock or float.
It’s generally best to get your interest rate locked in for the specified period of time, although you might want to check the best current rates before locking in the offer.
Most people choose to refinance because they’re ready for a better interest rate. If you’ve crunched the numbers and verified that a refinance, with all of the associated fees, is a step in the right direction, get started now. By going in informed and ready to ask for your best rates, you can make a months-long process much less taxing.