Thinking about Refinancing?
Whether it is saving money, paying off your mortgage earlier, or accessing equity, there are many reasons why you would want to refinance. Simply, refinancing is obtaining a new mortgage with new terms that will enhance your financial situation. If you understand how refinancing works and what you can do to improve your situation, you can enjoy the benefits of refinancing.
So what are the best ways to increase the likelihood of refinancing your home? Here are some strategies you can incorporate:
Get Your Finances in Order
As with your original mortgage, your mortgage lender needs to determine if you are a good financial risk. Instead of assuming that you will be approved for refinancing, you should review your finances well before you start the refinancing process. Not only will this give you a clear picture of your financial health, but it gives you a chance to make any changes before you chat with your lender. What specifically should you do?
Determine the Mortgage You Want
Refinancing your loan offers you the chance to make changes that benefit you. This could mean obtaining a lower interest rate, changing the length of the term, or moving from one type of mortgage, such as an adjustable rate, to another, such as a fixed rate. Take this time to design your new mortgage to fit your current needs. If you are refinancing for financial savings, use available online calculators to verify that your changes will lead to the savings you want. Keep in mind that it could take some time to recoup the costs of refinancing before the savings come into play.
If your finances are in better shape now than when you first obtained your original mortgage, you could qualify for better terms. But when determining what you want, compare your financial state from your first mortgage to now to ensure that the terms you are asking for are reasonable.
We all love it when property prices are on the rise, but it would be foolish to believe that they cannot go down. The appraisal, which is a crucial factor in refinancing, will indicate whether the value of your property has increased or decreased.
Instead of just hoping that your house has increased in value, engage in some property fitness. Before starting the refinancing process, take a look around your home. Forget the paint color or faux granite counter tops, but look at the structure, the electrical system, and the roof, for example. Are they in decent shape? Do they need repairs or maintenance? These types of areas in and around your home are used in assessing your home’s value. Get your home in the best shape possible to qualify for the refinancing you want. If you think you owe more than your home is worth, click here to learn more about the Home Affordable Refinance Program.
You may feel comfortable with your current mortgage lender who is familiar with your financial situation. But it pays to shop around. Interview several mortgage lenders to see what they can offer you. Maybe one can provide a better rate, or another can reduce the fees you need to pay. Once you are armed with information, you can choose the lender that matches your needs the best.
It’s Never Too Early
The most important way for refinancing your home is to be prepared. Determine what you want to achieve, arrange your finances accordingly, and double check all details. It’s never too early to start planning for refinancing, and it can only work in your favor.