While opinions may vary, there are some key factors that can help you choose if refinancing is ideal for you. These 8 tips will help you quickly and easily refinance your home.
Talk to someone you can trust
Talking to a licensed professional at a trusty institution is the best way to begin. You should not refinance if it isn’t a good idea. It is important to determine if refinancing is right in your case. Do not pay a fee to discuss your options with a company.
Each person has different financial needs and situations. Talk to a licensed loan officer over the phone for at least 15 minutes to discuss your situation. Be prepared to provide a current mortgage statement and a paystub for every loan applicant.
When discussing refinancing options or applying for a loan to fund your home equity, you shouldn’t feel like you’re in a car dealership.
Take into consideration your long- and short-term goals
One of our licensed Beverly Hills mortgage broker professionals will be happy to discuss your future goals over the next five, ten or fifteen years. We can help you create a refinance strategy tailored to your needs, such as type of mortgage and term.
We discuss, for example:
- What length of time do you intend to stay in your home?
- What time do you intend to retire?
- Are you a parent? What age are your children? Are they going to college?
- Are you averse to career changes?
- Are you able to make more money? This could allow us to reduce your term.
- Are you in other debt? Which type of debt are you carrying and at what interest rates?
Get an estimate of your expected closing costs
Beverly Hills Mortgage Brokers must provide a loan estimate to borrowers for their closing costs. The loan estimate summarizes costs but we recommend getting a breakdown on the initial fees worksheet.
Keep in mind that different lenders may charge fees for your breakdown. Borrowers may claim that they have been quoted a rate without points (a point equals 1%) but later discover that they were actually being charged a 2.2% origination fee.
Learn the Cost-to Benefit Ratio
Our Beverly Hills Mortgage Brokers suggest that you calculate how long it will take for your closing costs to be recouped. Simple math shows that if you refinance at $4,800 per month and save $240 each month, it will take 20 months to pay off the cost.
Remember the key questions from Tip 2: Think about your long-term and short-term goals. If you are only going to be in the house for 3-4 years, and it takes you that much time to recover the costs, you might not want to refinance.
Don’t be greedy if the loan is a good fit for you right now
Refinance is a smart move if you’re shopping for a mortgage. Don’t wait for the market to improve. Get the lowest rate possible as soon as you can. You could lose your chance if you wait.
Ask any expert who picks stocks, and they’ll tell you it’s almost impossible to predict the market. Rarely do people buy at the absolute lowest price and sell at its highest. It is a good idea to refinance right away, even if your neighbor may get a better rate by waiting.
There is a good chance that another neighbor missed the opportunity because they waited too long. Feel confident that you have made a significant improvement in your financial situation.
Learn what Debt should be included in your Refinance
Should you refinance existing balance owed debts (known as Cash Out) or include additional debt (known to be called “Cash Out”) when refinancing?
It depends on your personal circumstances, just like other answers. It is a good idea to try to convert your high-interest debt into a lower-interest loan with a tax-deductible rate if you have a lot. It is possible to skip short-term and low-interest rates debt.
Remember that interest rates can vary depending on which type of mortgage you apply for (Rate and Term vs Cash Out). You will likely only be able to refinance Cash Out if your home is worth less than 80%.
From the beginning, be honest
Your financial situation is important to your licensed professional so they can offer you the best advice. Let your Homeowners Advantage representative know as soon as possible:
- What you truly believe your home is worth
- The status of any home-improvement project
- The number of units in your house
- If the home is not your primary residence
- Concerning any employment lapses within the past 2 years
- Any credit problems
Collect your Financial Information
Refinance is something you should consider. Get your current paystubs and most recent mortgage statements, W-2s and tax returns from the last two years. Keep all financial records and documents intact until the loan is paid off. Do not add any additional debt during or prior to the refinance.