11 Tips For Refinancing A Mortgage
If you are a homeowner who is thinking of refinancing, do not be intimidated about the process or the paperwork. There are professionals available who are trained and educated in the mortgage field to help you with the refinancing process. Chances are that over the course of a typical mortgage, a home owner will have an opportunity for refinancing.
Some Possible Reasons to Refinance a Mortgage May Include:
- Saving money by lowering the interest rate.
- Making monthly payments more manageable by stretching out the remaining loan term.
- Stabilizing the monthly payment by switching to a fixed-rate mortgage.
Refinancing can be broken down into a series of smaller steps, all of which are fairly simple. Following are eleven tips that can help you refinance a mortgage successfully:
1.Begin by getting all of your paperwork to the lender. The paperwork should include verification of all income and assets such as tax returns, W2s, paycheck stubs, and bank statements. Rates are consistently fluctuating, so if you are looking for a particular interest rate, your window of opportunity can be as little as a couple of hours.
2.What are your reasons for refinancing? Is the purpose to lower the interest rate, reduce the monthly payment, or lock in a fixed monthly payment? The type and terms of the refinance mortgage will depend on one of these or a combination.
3.Based on your goals, set targets for interest rates and monthly payments. Decide on the mortgage term and apply for a fixed or adjustable-rate mortgage. Using a refinance mortgage calculator can help you define your limits.
4.Check your credit rating. A low credit rating will affect the interest rate and the availability of a refinance mortgage.
5.Determine any changes in property value. A drop in property value can make it difficult to refinance a mortgage.
6.Inquire about any prepayment penalties on the existing mortgage. Some mortgages have penalties for early repayment which is important to know so it can be measured against the potential savings from refinancing.
7.Obtain refinance mortgage quotes from a variety of refinance mortgage lenders. Mortgage rates and lending standards vary from one institution to another.
8.Ask lenders for full disclosure of points, closing costs, and other fees.
9.Ask lenders how long they will commit to their rate quotes.
10.Use a mortgage calculator to compare monthly payment savings with closing costs and other upfront fees.
11.Remember it is important to assure the savings in monthly payments because they will, in time, compensate for the upfront costs.