You have probably noticed that the interest rates are currently at an all-time low. If you are in the position of being able to qualify for one, it would definitely be a great time to do so. Before attempting it, though, you need to make sure that it will be the best move for you to make.
You do not want to go backwards when you trying to move forward. Let’s dig into 8 refinance tips that will save you a substantial amount of time and should put more money into your pockets.
- Goals: You need to know why you want to refinance. There are a couple of reasons that you would want to. It is important to figure this out before you try and talk to a lender. They will want to know what type of refinance loan that you are wanting. If you know your goals, you will know how to answer that first question. In case you need a refresher the most common reasons are listed below.
- Pay off your mortgage more quickly.
- Lower your monthly payments.
- Lock in a lower interest rate.
- Get cash from the equity you have built up.
- Loan Type: As you might guess this goes along with the first point. Once you know why you want to get the loan, you will use that to decide which type of loan that you want. The lender may be able to direct you in the proper direction but remember that they are in business to make money. They may try and talk you into a loan that will benefit them, but not the most optimal choice for you. Here are the types of loans that you will have to choose from.
- Rate and Term
- Cash-out
- Cash-in
- No closing cost
- Streamline
- HIRO
- Compare: You need to check all the points in this article before you actually start comparing offers, but it is a step that you need to do. The easiest way to compare home loan refinance options is to use an online platform that does all the work for you. All you will need to do is sort through the offers and choose the best one.
- Equity: One step that you must do is to figure out your equity. You want to have at least 20% equity. Most lenders will not even consider offering you a refinance loan unless you have reached this goal. To find out what your current equity is all you must do is take the amount of the current market value of your house and subtract what you have left on the loan.
- Credit Score: You must have had a decent credit score and history otherwise you would not have gotten the original loan. Double check to make sure that it has not gone backwards, and if there is anything that you can do to increase the number do so before applying. The better your credit scores are, the better the rate will be on the refinance loan.
- Closing Costs: Do not forget that you will have to pay closing costs, again. This can range anywhere from 2% to 5% of the amount of the loan. Make sure that you have a way to cover those costs before you start applying for loans.
- Home Appraisal: Before the refinance loan is offered you may have to get a current home appraisal. You need to make sure that your house is ready for this because you want it to be appraised at the highest level possible. Clean up the yard, fix anything that is broken, and maybe throw a new coat of paint on the walls and ceiling.
These are 7 of the most important refinance tips to keep in mind to save you some time and money. The bottom line is that if you have been paying on your home for five or more years you may be a good candidate for a refinance loan at an extremely lower price. If not, you may want to wait. Either way you need to dig into the subject a little deeper and make sure that it is the best move for you to do. If it is, go for it.
