5 Tips for Refinancing Your Home
At certain points homeowners may consider refinancing their home for several reasons. Maybe it is time to do a renovation and pull out some equity or perhaps when rates dip it may be worth considering a refi for a lower payment. Whatever the reason is there are a few steps to consider before you call a lender and just jump in. Here are 5 tips for you to review before beginning the process.
Calculate the numbers
It may seem like a refi is always a great idea if you can either pull out equity or if you are getting a lower rate. However, the one other major consideration in the equation is time. Figure out what loan term makes sense with your future and retirement plans. Resetting the clock on a 30 year mortgage may not make sense if you are 10 years away from retirement.
Check your credit
You are allowed to check your credit once per year from the major bureaus under federal law. Even if you know that you pay your bills on time, it is still wise to check it for accuracy and to make sure there are no mistakes. How solid your credit is will have a big impact on your borrowing power and what rate you will get.
Prepare your finances
Lenders will check your overall financial situation so it’s best to have that in order. Aside from your credit score, they will like to see that you aren’t maxed out on your available credit. Additionally, it is also helpful to show that you have liquid savings on hand for several months in the event of a job loss or the like. If you don’t have this on hand, a refi could still be a good option for you.
Estimate your home’s value
Lenders will also want to see that you have 20% of equity or more in your home. As market conditions can fluctuate, it is a good idea to have a value in mind of what your home is worth today especially if you are pulling out equity in the refinance. You can do preliminary research online to see what has recently sold or you could reach out to me for more information. I would be happy to help.
Unless you have a reason not to, then begin with your current lender for a refi. Typically most lenders will want to retain you as a customer so they will offer you the best loan package. You should also do your homework and at least shop around to know what current rates are being offered as a benchmark.
Do you have any questions about your situation? Contact me today and I would be happy to provide some guidance.