As a result of rising interest rates, job losses and other economic factors, more home owners than ever are now considering the option of mortgage refinancing in a bid to lower their monthly payments. While this is normally a good idea for many people, there are a few pertinent questions that require answers before you even consider signing off on any form of refinancing agreement.
Do I Have Equity in my Home Yet?
In order to qualify for a new loan without having to cover the cost of private mortgage insurance (PMI), you will need to have equity in your home of at least 20% - but preferably more. If your equity level is less than 20%, the additional cost of PMI could end up outweighing the savings benefit of a refinance. Numerous home owners today are finding themselves underwater, which means that they currently owe more on their mortgage that what the home itself is actually worth. However, if they are able to provide a lump sum payment that will help them gain the needed 20% equity first, it may still be worthwhile for them to apply for refinancing.
How good is my Credit Score?
This is one of the most important factors that will affect whether you will be able to qualify for mortgage refinancing or not. Although the final mortgage rate you receive will depend on your overall credit score, with lower rates being awarded to those with the highest scores and credit record, it is important to remember that you will need to have a current credit score of at least 720 or more for most companies to even consider submitting your application. If you have a credit score of 620 or lower, you may find your application being turned down until such time as it has had time to improve.
What are my Financial Goals?
The main reason for mortgage refinancing is to help lower the monthly repayments on a home; however, some people refinance in a bid to shorten their repayments terms as well, which results in them repaying higher amounts over a shorter period. As a result, it is important for home owners to ensure that they will be able to commit to their new repayment schedule. It may not be a good idea to opt for higher payments if you are struggling to afford to finance your retirement, and it would be just as unwise for older couples who are planning to retire in a few 10 years to opt for a refinance period of 15 or 20 years.
It is also important to use the services of a mortgage refinancing officer or firm that is reliable and that has an excellent track record. You will need to ensure that all information you provide at the time of making the application is honest and accurate, as this will enable it to be processed in as short a timeframe as possible. Contact us today to find out how we can help you refinance your current mortgage.
Do I Have Equity in my Home Yet?
In order to qualify for a new loan without having to cover the cost of private mortgage insurance (PMI), you will need to have equity in your home of at least 20% - but preferably more. If your equity level is less than 20%, the additional cost of PMI could end up outweighing the savings benefit of a refinance. Numerous home owners today are finding themselves underwater, which means that they currently owe more on their mortgage that what the home itself is actually worth. However, if they are able to provide a lump sum payment that will help them gain the needed 20% equity first, it may still be worthwhile for them to apply for refinancing.
How good is my Credit Score?
This is one of the most important factors that will affect whether you will be able to qualify for mortgage refinancing or not. Although the final mortgage rate you receive will depend on your overall credit score, with lower rates being awarded to those with the highest scores and credit record, it is important to remember that you will need to have a current credit score of at least 720 or more for most companies to even consider submitting your application. If you have a credit score of 620 or lower, you may find your application being turned down until such time as it has had time to improve.
What are my Financial Goals?
The main reason for mortgage refinancing is to help lower the monthly repayments on a home; however, some people refinance in a bid to shorten their repayments terms as well, which results in them repaying higher amounts over a shorter period. As a result, it is important for home owners to ensure that they will be able to commit to their new repayment schedule. It may not be a good idea to opt for higher payments if you are struggling to afford to finance your retirement, and it would be just as unwise for older couples who are planning to retire in a few 10 years to opt for a refinance period of 15 or 20 years.
It is also important to use the services of a mortgage refinancing officer or firm that is reliable and that has an excellent track record. You will need to ensure that all information you provide at the time of making the application is honest and accurate, as this will enable it to be processed in as short a timeframe as possible. Contact us today to find out how we can help you refinance your current mortgage.