- Personal Finance
How to Refinance your Home Mortgage
You have a home mortgage and you're thinking about refinancing. Should you do it? And if you decide to go ahead with refinancing, what is the best way to do so? You want to make sure that you get the best deal from refinancing your home, otherwise you're defeating the purpose. Here are the steps that you need to take to make the most out of refinancing:
o Assess whether or not you really want to refinance your home. You should think about your reasons for refinancing so that you know if you're getting the deal that's right for you. You might be refinancing because you want to get a lower rate on your home mortgage. You may be opting to refinance because you want to switch from a variable rate to a fixed rate mortgage. Or perhaps you need to lower your monthly payments. Alternatively, you may be refinancing in order to get a chunk of money to pay off higher-interest loans like credit cards. Knowing your reason for refinancing will help you to determine which loans are best for you.
o Do your research. Look into the market and see what the general rates are for refinancing your home. You can check the real estate sections of newspapers and online real estate sites to get a general idea of average rates. If you have a little bit of time before you really need to refinance, you can watch the rates and wait until the time is best.
o Get your credit in order. You'll get better rates on refinancing if you have good credit. It might not be possible to do this (especially if you're refinancing because you need to pay off higher-interest loans). But if you can improve your credit before refinancing, you'll probably be better off. At least take the time to explore what your options are.
o Sit down and make a list of questions to ask a mortgage professional. At the top of the paper, list your reason for getting a loan so that you can always keep it at the forefront of the conversation. For example, if a lender starts telling you that you can lower your monthly interest rates with a variable rate loan but at the top of your paper, it says that your goal is to switch to a fixed rate mortgage, you won't be swayed by the lender. The list of questions beneath this goal should include the interest rate of the loan, what the monthly payment will be, and how long you'll be making payments.
o Find a mortgage professional that you're comfortable working with. You can find one online or you can go to your bank and work with someone there. Make sure that you are comfortable with the lender. Check into their expertise but also trust your gut instinct about whether or not this is someone that you want to work with. You should feel like your questions are taken seriously and your individual needs are being taken into consideration.
o Sit down with the mortgage lender and go over different loans that are available to you. You should make sure to ask if you qualify for any special loans. For example, if you are over the age of 62, you might consider getting a reverse mortgage instead of doing refinancing. If you meet certain qualifications, you might qualify for FHA refinancing instead of other refinancing. Ask about how the lender can help tailor the refinance loan to your unique situation.
o Be patient. If the loan doesn't seem to fit, hold out for a better one. The market is regularly changing and you shouldn't refinance at the wrong time just because you're desperate for some cash. Make sure that you'll be able to make your monthly payments, that the interest rate is suitable and that the terms of refinancing in general are what you need.
Refinancing your home can be a great way to adjust your home spending to meet your changing needs. You just need to put in a little work to find the right loan - and the right lender - for your situation.