If Your Considering Refinancing Your Home Here Are Six Important Things You Need To Know
There are several reasons a home may want to refinance. Homeowners can use the new loans to lower their interest rates, pay off mortgages at a faster pace or turn their home equity into cash. Before choosing this path, you need to makes sure that refinancing is right for you. Here are six things to consider to help you with the answer.
1. Refinancing is a process
Refinancing typically takes 30 to 45 days from start to finish. Once you choose a lender they will need to assess your income, assets and credit history. You will need to gather all your documents such as pay stubs and bank statements. An appraisal will also be done for the new mortgage. Make sure to clean your home and make sure your landscaping is in top shape.
2. Time is of the essence
Currently, we are at historic lows and this is a perfect time to refinance. This may not always be the case. It is smart to lock in a low monthly payment as well as a low rate. Once rates go up, the savings might not be there.
3. There are many reasons to refinance
A low interest rate is a big reason to refinance, however, it is not the only reason. The term of the loan is another factor, if you’re looking for a lower monthly outlay, a long-term loan will likely work best. This is not the case if you want to repay as soon as possible because you might get locked into a higher rate. Terms are important but other reasons also include changing your loan type, cashing out your equity or removing a name (in cases such as divorce).
4. You’re not tied to your existing lender
You can always go with a new lender when refinancing. Once you have paid your original mortgage off with your lender you are free from obligation to them. This gives you an opportunity to shop around for the best terms and rates.
5. You can reinvest in your existing property
Many homeowners take the cash out equity and turn around and make improvements, renovations or additions to their home. These changes not only benefit your living situation but also can add more value to your home.
6. The decision is yours alone – so make it an educated one
Everyone has different goals and personal interests in life. This is also true with home purchases and refinancing. Refinancing is a personal decision and all options should be explored. If you are thinking of refinancing, contacting a lender who can help you with all aspects of home refinancing is the first smart choice of the process.
