5 Mortgage Refinance Tips – Timing Is Everything

Real Estate

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Is refinancing for you? You cannot shoot blanks in refinancing your mortgage. While this might be a lifesaver for many people on short term, you risk having to carry on higher interest rates and even lose your equity in the long run. Knowing the basics and the right timing with refinance tips from experts can turn the tables around for you.

What is a Mortgage Refinancing?

A lot of people are considering mortgage refinancing for many reasons such as an extension on the term of their loan, reduction of interest rates, lowering of monthly payments, get cash out of equity, and to shift from fixed to an adjustable rate of mortgage.

Mortgage refinancing basically refers to getting a new loan to pay off your existing loan. It serves as a buffer to extend the term of your loan and to take advantage of low monthly payments and interest rates.

Top 5 Mortgage Refinance Tips from the Experts

In the mortgage refinancing arena, you have to strike while the iron is hot. 2019 is said to be the best year to jump ito mortage refinancing because it’s at its lowest since 2017. While the interest rates have consistently been set below 4{6981676f896451ec7f0201b4f2e2dba09f1165d5d0ff016768ccdcb379f49531} for the last 30 years, this year is peak season to get to work on refinancing your mortgage.

You have to grab the opportunity right now to take advantage of the low rates. However, you should take a step back to determine whether mortagage refinancing makes sense for you or could work against you. Here are some tips from the experts to guide you with refinancing your home loan:

  1. Is Your Credit Score Good Enough? Mortgage refinancing is clearly not for everyone. A lot of lenders or financial instructions have strict rules and higher standards in terms of loan approvals. In fact, even those with good credit standing may not qualify to get low interest rates. Your credit score would largely determine your interest rates and closing fees. It is recommended to check on your credit score as lenders would only approve borrowers with a credit score of at least 760 or higher for the lowest mortgage interest rates. Those with lower scores would still quality for a new loan but may have higher interest rates. Lenders would usually get the middle score or median from the three major credit bureaus so you have to check on this before taking the first step to mortgage refinancing.
  2.  Know Your Financial Goals. Determine whether mortgage refinancing is the right tool to achieve your financial goals. Whether you would need a cash-out refinance, extension or adjustment on your existing loan term, or to decrease your monthly mortgage payment, you need to check if mortgage refinancing can help you lower your interest and closing rates and get you the best deals while paying off your loan at a shorter time. Knowing your current financial goals will help you plan ahead and get you on the right track with paying off your home loan.
  3. Speed is the Key. As mentioned, timing is everything. So, you need to act fast with mortgage refinancing. The rates could be erratic and can go from high to low at any point in time. You have to know when to jump the gun. Consult your loan officer and be on the lookout for any emails for loan processing and documentation.
  4. Know the Different Refinancing Schemes. There are varied types of refinancing models or programs available to suit your financial objectives:
  • Cash-Out Refinance – This mode of refinancing allows you to qualify for a new loan to pay off your existing home loan and get cash using your equity to pay for other debts or to finance home improvements and other urgent expenses.
  • Streamline Refinance – This is standard refinancing with faster processing and less documentary requirements needed.
  • Home Equity Loan – This works like obtaining a second mortage or a new line of credit with your home equity.

  1. Take Advantage of the Hike In Home Prices. When home values rise, that would signal a good time to make cash-out refinance in order to boost or build your equity.

There are costs and benefits to mortgage refinancing you should know about before making that important decision with your home loan. A reputable loan officer can help you sort things out and calculate the benefits and costs of getting into mortgage refinancing. Like any other financial transactions, there are risks associated to this and the above refinance tips can get you a step ahead of the mortgage refinancing game.

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