The Top 10 “Must-Do’s” Before Refinancing Your Home
If you’re thinking about refinancing your home, here are the top 10 things you should do to get ready. Follow these easy steps to take control of your mortgage and make the most of the refinance process!
1. Know Your Goals
Before you begin the refinancing process, take 15 minutes to write a couple bullet points about why you want to refinance. What are your goals? To lower your payment? To pay off the loan faster? To find a better rate? Having clear goals will help picking the right lender and the right program much easier.
2. Know Your Current Mortgage
It may have been 10 years since you gave your mortgage any thought, especially if you’re on an automatic payment system. Dig up your original closing documents and refresh your memory. This paperwork may also come in handy when applying to refinance.
3. Consider an Appraisal
If you think your house has gone up in value, you may be able to get a lower loan-to-value ratio. That means the amount of your loan is smaller compared to the value of your home, helping you secure a lower rate or avoid PMI.
4. Know Your Income
It’s tax season, so you likely already have W-2’s and other financial documents on hand. Give them a once-over to see how much you’re really bringing in.
5. Know Your Expenses
If you have a household budget, great! If not, look at the last few pages of your checkbook and credit card statements to see how much you spend each month. A new mortgage will have to work around these expenses.
6. Learn About Home Loans
You probably know that down payments and interest rates are important. But did you know that the most influential factor is the length of the loan? The shorter the loan, the higher the payment, but you’ll save thousands in interest.
7. Research Types of Lenders
You might have a mortgage through the same bank as your checking account. Remember that you have options. Mortgage brokers are independent and have access to more flexible rates and programs than big banks.
8. Interview Lenders
You are the customer, so remember that you can interview lenders. Ask how their company makes money off of the deal. Seek out someone who can act as an impartial 3rd party.
9. Get Options
The first offer isn’t the only offer. Get a second opinion. You’ll be able to make a more informed decision if you have options to compare.
10. Get Some Perspective
Big financial decisions, especially decisions about your home, carry around some pretty big emotional weight. It can be easy to lose perspective. Financial decisions should be based on facts. Dollars and cents. Math. Talk to a trusted friend who can offer an independent opinion in your best interest and really listen to their perspective.
Unlock the Secrets of Home Finance
Following these easy steps can help you make the most of a home refinance. And if you every have any questions, give us a call. We make sure our clients feel like they’re in the driver’s seat.