Home Refinancing: 10 Tips
Not all mortgages are the same and if these 10 home refinancing tips will allow you pull cash out of your home's equity to make purchases or repay high interest debts, you may want to consider it. Refinancing can be a wise option for those who simply want a lower monthly mortgage payment. If mortgage refinancing seems like the right option for you, these tips can help you evaluate your choice and facilitate the refinancing process to ensure that you obtain a new mortgage loan with as little stress as possible.
- Check the current mortgage interest rates to ensure that it’s the right time to seek a new home loan. Home refinancing with the right interest rate can leave you with a more manageable mortgage payment. The interest rate, however, should be lower than your current mortgage interest rate to make a noticeable difference in your monthly payments.
- Check your credit report and score. Your credit rating determines whether your lender will approve you for the best rates. Before refinancing your home, check your credit to evaluate your eligibility for a low rate.
- Fix credit reporting errors. Reporting errors in your credit report can result in damage to your credit score. Dispute the errors you find with the credit bureaus before refinancing your home and allow your lender to review your credit report and score.
- Shop around for interest rates with various lenders. Some lenders offer better terms than others. You don’t have to refinance your mortgage with your current lender. If another bank offers you a better interest rate, consider switching loan providers.
- Prepare to pay closing costs. Home refinancing isn’t free. You must pay fees to your lender for the privilege of a new home loan. Ask each lender you apply with for a good faith estimate of the charges associated with refinancing your home. Consider each lender’s fees in relation to the interest rates they charge to determine which lender offers the best deal.
- Choose the type of home refinancing loan you want ahead of time. If you want to pay off your mortgage more quickly, you may look into a fifteen year mortgage refinance plan. If, however, you want to lower your monthly payments, a 30 year plan would be more beneficial. Ensure that the home refinancing loan you apply for meets your needs.
- Calculate how much home refinancing will save you over the course of the loan to determine if refinancing is the smartest option. Refinancing your home may save you thousands of dollars or it may not save you enough money to make up for the lender’s fees.
- Consider paying down points when you refinance your home. Paying down points allows you to bring down the interest rate. This is a good option for individuals who plan to remain in their homes for the life of the loan.
- Write down questions for your mortgage broker or loan officer before refinancing your current home loan. A written list helps you remember any questions you have the next time you meet with your mortgage broker or loan officer to discuss the new loan. Addressing your concerns before closing can help alleviate any stress or reservations you feel about obtaining a new mortgage loan.
- Check your new mortgage title for errors after the home refinancing process is complete. Your home's deed will be filed at the land records office for your county. If you ask, your lender will allow you to review the title before its filed. This allows you to identify and address any errors you find before the loan becomes a matter of public record.