Mortgage refinancing can be a quick and simple process if you know what needs to be done. If you’re considering taking advantage of today’s historically low mortgage rates to refinance your existing loan, here are a few tips that can help.
Calculate the Benefits of Refinancing Your Home Loan
Calculate just how much you will likely save over the loan term by borrowing at today’s low-interest rates. Your savings may be substantial if you plan to stay in your home for a long time and want to lower your monthly payments or reduce the length of your mortgage term. However, if you have plans to sell the house and move in the next few years, refinancing may add to the costs instead of making homeownership less expensive for you.
Shop Around for Rates
Mortgage rates change daily, so shop around for the best deal available at any given time by calling multiple lenders or visiting their websites directly. Make sure to inquire about the various fees associated with each loan — upfront points, origination fees, and others — because these can add up quickly if you’re not careful when comparing loans from multiple lenders.
Check Your Credit Score
Your credit score, as well as your credit report, is one of the most important measures of your financial strength. Your credit score is essentially a number between 300 and 850 that lenders use to decide whether or not they should approve your loan application. By checking your credit score, you can work to improve it and make future credit applications a success. Checking your score for free is easy, quick, and, best of all – it won’t hurt your credit! If your credit score isn’t the best, you may want to hold off on applying for a refinance loan right now.
Know how Much Your Property Is Worth
If you’re thinking of refinancing, it’s a good idea to check the value of your home first. Current homeowners have seen major gains in home prices, so ensure that your home is worth the amount you think it is. You can use this information to help you negotiate with lenders on closing costs or better mortgage rates.
