Should I Refinance My Mortgage Now?
Mortgages are at record lows all across the country. Even if you recently got a mortgage, if your interest rate was high and your financial situation has improved, you might still end up with lower monthly payments. For homeowners who have had their mortgages for even longer periods, re-extending to 30 years can drastically reduce your monthly payment. Still, is it worth the hassle and potential rejection?
Complete a Personal Evaluation
The refinancing process can be long and complicated. Before you engage with bankers to get the process started, complete a personal evaluation of your finances and your property. Here are a few important questions to ask yourself:
- Do you have resources to cover fees related to refinancing the home?
- Have you built up enough equity to get any money back?
- Do you have current financial goals that could benefit from cashing out?
- Are the interest rates you qualify for now lower than what you paid before?
- Does re-extending your loan coincide with your financial plans for paying off your home loan?
- Will your current income and credit score help you re-qualify for a good mortgage rate?
You don’t need positive answers to all of these questions. Still, they will help point you in the right direction, so you can decide if refinancing is right for you.
Prepare Your Finances
Even if your finances are already in great shape, you have some house-cleaning to do before you refinance. Get rid of as many monthly payments on your credit report as possible. Prime candidates include small, personal loans or car loans. Next, pay up credit card debt as best as possible.
When handling debt, be mindful that your bank also wants to see cash in your bank account. You need this cash to pay for closing costs. The bank might also use this cash as proof that you aren’t stretching yourself thin to afford your home.
Choose a Bank Wisely
If you decide that refinancing is the right option for you, the first step is finding a compatible bank to partner with. Your original bank will be eager to be your first choice, but you will likely find better terms or rates from other lenders. Remember that you are the customer and banks are competing for your business. Don’t allow banks to corner you with poor offers.
Choosing the right bank is especially important if you have unique circumstances the bank needs to address. For example, self-employed persons often have a much more difficult time qualifying for a mortgage — even a refinanced one with no missed payments. Look for a bank that commits to addressing your unique needs and treats them like good challenges instead of inconveniences.
Here to Help You with Refinancing
Refinancing your mortgage is a big decision that should not be entered into lightly. If you have the opportunity to save money, it is almost always worth refinancing and cashing out. At National Home Loans, we are your refinancing experts. Let us help you decide whether refinancing is the best financial step you can take next. Contact us for more information or to apply.