What is a mortgage refinance
A mortgage refinance is the process of replacing an existing mortgage loan with a new one. The new loan may have different terms and conditions than the original loan, such as a lower interest rate, a shorter loan term, or a different type of loan. Popular reasons to refinance: Reduce interest rate to save money monthly and/or over the life of the loan Consolidate debt to save money monthly Access cash for home improvements and renovations Use your rising equity for upcoming major purchases (like a vehicle, boat, or RV) or future events (such as college tuition or a wedding) Removing someone from the title after a major life event like divorce or a homeowner passing away Reduce the term of the loan to pay it off sooner Convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage Investment opportunities to build funds for retirement When you refinance your mortgage, you will go through a process similar to the one you went through when you first obtained your mortgage. You will need to provide financial information to the lender, such as your income, credit score, and debt-to-income ratio. You will also need to pay closing costs, which can include fees for the appraisal, title search, and loan origination. It’s important to evaluate your personal circumstances and the cost of refinancing before making the decision. It’s also important to compare offers from multiple lenders and consider the long-term savings of a lower interest rate versus the short-term costs of refinancing. It is also important to consider the time you have spent paying your existing mortgage and the time left in the loan before you refinance as if you refinance too soon after obtaining the original mortgage, you may not have enough equity in the property to refinance, or you may end up paying more in closing costs than you will save in interest over the life of the loan.
What To Do When Purchasing a New Home
Homebuyers may not realize they are hurting themselves during the mortgage application process. Here are some actions you’ll want to keep in mind when applying for a new home loan. Maintain your current employment. Your loan is qualified based on your current income history. A change in employment might eliminate your Loan Advisors ability to include income such as bonuses or overtime. Keep your current and active bank accounts. Wait until after the process is complete and you have the keys to your home before changing banks. This might make sourcing the funds used for down payment and closing costs very difficult to use and creates more paperwork. Save money for a down payment. Saving money can be challenging but you will need enough money for a down payment and settlement services, so keep those funds available. Do not make any large cash or unverifiable deposits. Any large deposits in your bank account should be discussed with your loan advisor before placing them in your account. According to the Patriot Act this could require additional documentation or those funds will not be considered. Do not run up credit card balances. This will increase your monthly payments and could disqualify you for the home you are buying. Plus you do not want to incur debt that you cannot afford to repay. Wait to buy any big-ticket items. Again, wait until after your loan has closed to buy that new sofa you want for your new house. If you don’t end up getting the house, you’ll avoid getting stuck with a new item that might not fit in your apartment. Avoid letting other companies run your credit. More inquiries create more questions that need answers and paperwork. Who wants that? Wait until the process is complete. Do not co-sign for anyone on a loan. This debt will become yours in the eyes of the lender and might disqualify you from your home purchase. This will increase debt to your ratios and possibly disqualify you from the loan you are seeking. Be upfront and honest about new debts. During the application process, always tell your Loan Advisor of any new debts you acquire. They might impact your qualification levels. The biggest thing you’ll always want to DO is consult your Loan Advisor when anything happens that might impact your credit, income, or assets. If you’re unsure, ask questions. Loan Advisors are highly trained and licensed so they will be able to address all of your concerns. Do your part to ensure a fast, accurate, and enjoyable loan process for all parties involved and count on your Loan Advisor to stick with you through the entire process.
The Right Mortgage Solution Can Save You Money
When homeowners think about saving any significant amount of money often times they turn to their home. Because they have paid into their mortgage over the years, the opportunity to lower one of the biggest monthly expenses exists all around them in the form of equity.