5 Things to Know about Refinancing Your Mortgage

Thinking about refinancing the mortgage on your Oran Park home? It can be a great decision, allowing you to tap into lower interest rates, to change lenders, or to lower your loan to value ratio. However, there are a few things that you’ll need to know about refinancing before you jump into the process.

1. It’s Not as Simple as You Think

You would think that refinancing a mortgage would be a pretty simple process. After all, you’ve already secured one home loan. How hard could it really be to refinance the same home? Actually, it can be pretty difficult. You’ll need to complete a lot of paperwork this time around, perhaps even more than you did with the initial home loan.

2. Know Your Underlying Goal before Beginning

The second thing you need to know about refinancing a mortgage is that it’s essential you have your underlying goal nailed down before beginning. Why are you looking at refinancing? Do you want to lower your interest rate? Do you want to reduce your loan to value ratio? Do you want a lower monthly loan payment? Does it make sense to go for a lower monthly payment with a new mortgage if you’ve already paid the lion’s share of interest on the first loan?

3. Shop Around for Better Refinancing Rates

Chances are good that your first thought will be to work with the same lender you used to initially purchase your Oran Park home. That can be a good idea, but it’s a wise bet to shop around a little first. This is the best way to make sure that you’re really getting the lowest interest rate in your refinancing project. Of course, doing that requires that you have an idea of which lenders you want to work with, and then you must communicate with them, provide them with your personal and financial information, and all the rest. It can take time, so start early.

4. Do You Have Enough Equity?

No matter why you’re thinking about refinancing, you need to make sure that you have enough equity in your home to make it possible. Even then, it may not be a reality. Some conventional lenders will not refinance a mortgage if you have little or no equity in your home, so know how much value you’ve built up over time and then plan accordingly. It might ultimately be better to wait until you have more money in the home.

5. Know the Term You Want

Finally, make sure you know the term you want on the loan. Do you want a shorter term loan? Do you want to go with a longer term loan? Both offer benefits – a shorter term loan can be paid off more quickly, but costs more per month, while a longer term loan costs more over time, but offers lower monthly payments.

There you have them – five important considerations to make before refinancing your home. It can be a difficult process to navigate on your own, though. Working with a broker can simplify things greatly.

Source:

https://www.investopedia.com/mortgage/refinance/9-things-to-know-before-you-refinance-mortgage/
https://www.bankrate.com/finance/mortgages/what-to-know-before-you-refinance-1.aspx
https://www.nerdwallet.com/blog/mortgages/how-to-refinance-your-mortgage/