Refinancing may help lower your monthly payments. Here are a few tips for those thinking about refinancing.
Mortgage rates are rising in western real estate markets, in response to a very bullish market in the last few years. The good news is that they’re rising from record lows. Refinancing your mortgage now may help you lower your payments, especially if you’ve owned your home for some time and want to see if a better rate can make those monthly payments easier. It’s not right for every situation, but depending upon your circumstances, it could help you out a great deal.
Here are a few tips for those thinking about refinancing:
- Ask yourself if you can get a good deal. Refinancing only makes sense if you can benefit from it in some way, either with lower monthly payment rates or less overall payment in the final equation. Figure out your goal with refinancing before taking any further steps.
- Determine how much longer your current mortgage lasts. The longer you pay off your mortgage, the greater percentage of the payments goes to the principle instead of the interest. Lowering your rates may not make sense if it means extending the length of your mortgage and forcing you to pay more overall.
- Get your credit score and the current value of your home. Good credit will let you negotiate for a lower rate, and knowing the current going price for your home lets you know how much leverage you have to negotiate. An agent is a great place to start to give you a valuation.
- Get an estimate. When it comes to finance, different organizations will offer different deals for refinancing. Get a loan estimate from different lenders and use a mortgage refinance calculator to ensure you know what all of the costs will be.
- Assess all of the costs. There are lots of fees associated with refinancing, which you should account for before you go further into the process. You may need to gather specific paperwork too, which your current lender can provide. Make sure you have enough money on-hand to cover those costs.
- Lock your rate. This is where an expert can really help. Rates fluctuate, so it can be tricky to determine the best point to lock your rate in. Once that’s done, you can complete the process of refinancing.
Remember, a mortgage refinance is intended to help you, so if it can’t help you reach your stated goal, then there’s no point in continuing. If you think you can benefit from one, however, then speak to a trained mortgage expert to help plan your next steps!