Mortgage rates finally seem to be rising, not exactly the news homeowners were hoping to hear. The average rate on 30-year fixed-rate mortgages climbed to 4.46 percent this week from 4.43 percent last week. This marks the highest average since early 2014, but homeowners wanting to refinance have other options.
Smart homeowners looking for lower payments are not worried about rates and are using this free government program found here to save as much as $3,500 a year. Entry to the program is set to expire in December 2018 so thousands of homeowners are rushing to apply. Some homeowners have managed to eliminate 15 years worth of mortgage payments.
Even with rates rising there are thousands of homeowners looking to refinance daily for dozens of different reasons. The most important thing you should do before refinancing your home is shop around and research your options. Request multiple online quotes, compare and find a program that helps with your unique situation. Always take your time!
Here are the Top 6 Reasons Homeowners Refinance their home:
- Lower Rate or Payment.
- Consolidate Debt.
- Renovate Home.
- Reduce or Extend Loan Term.
- Refinancing to Get Rid of PMI or Mortgage Insurance.
- Take Out Equity for Business or Investment.
Before refinancing consider these 5 refinance tips!
Identify Your Goal
Identify your end goal for refinancing. Is it to reduce monthly payments? Take out equity? Switch from A R M or Fixed? Clearly articulate why you’re looking to refinance.
Make Sure Your Credit Is In Good Shape
Ensure that your credit is up to par! You should always review your credit report before applying for a mortgage. Make sure you check for any errors that may be present and address them before you apply for a loan. If you have collections or other negative items on your credit you may be able to remove them through this program here.
How Long Will You Live In Your Home?
How long do you plan on staying in your current home? Refinancing can reduce your monthly payment initially, but that doesn’t always mean it will save you money in the long run. Fees and interest rates need to be considered when calculating if your new mortgage will save you money over the entire life of the loan. A licensed loan officer will be able to help you decide if refinancing is right for you. We’ll help you calculate at which point you will break even and begin to save.
Know Your Numbers
After consulting with a loan officer about ways to structure a loan to refinance your current mortgage, examine options with varying rates, refund points, loan amounts, closing costs and monthly payments. Divide the closing costs by the amount your monthly payment will be reduced by refinancing. This tells you how long it will take to recover the refinance closing costs. Also, calculate the total savings over the life of the loan by multiplying the monthly savings, the number of payments compared to your current payment and the number of remaining payments
Don’t Do Anything Crazy Until Your Loan Closes
Lenders now employ tracking systems that notify them when new credit accounts are opened. New accounts can impact your Debt-Ratio/Qualification. It also increases the amount of paperwork you will need to provide as any new accounts opened you will need to provide a recent statement to show the amount owed on the account and the monthly obligation.