When you refinance your mortgage, your essentially changing the amount of money that you put towards each monthly payment. This has its benefits, though, because it allows you to pay off a mortgage a lot quicker and ends up reducing the amount of interest you owe, which means that your debt will be a lot smaller and, in the end, you’ll save a good deal of money.
You can refinance your mortgage to decrease the amount of money that you are putting forth each month, or to increase it. Decreasing the monthly amount you owe will lengthen the duration of the mortgage – and the payment cycle – by quite a bit, and you will probably lose money while you’re at it. However, if you currently can’t afford to make those payments each month, than this may be a good option for you. Or, if you can afford your payments and you can afford to pay even more money, then you can refinance and pay off your mortgage even quicker.
Step One: Learn Your Credit Score
Make sure you known your credit score and credit history. If your score is good, then the interest rates for the refinancing package will be, as a whole, lower and the process will be easier on your wallet
Step Two: Figure Out The Value Of Your Home
You can do this by researching the value of homes around your neighborhood and figuring out how much they sell for. I also recommend that you go to Zillow and other websites to find a good estimate of your home’s economic value. Write down these figures.
Step Three: Find A Good Mortgage Rate
Go online and look through a number of mortgage rates. Take note of the best ones and the ones that are most appealing and write those down or bookmark them. Then, do some research on them and figure out which ones are the most appealing to you. Usually, most of the information that you need will be on their website. If not, and you want to find out more, you can give them a call or email them.
Step Four: Determine The Ultimate Cost Of Refinancing
Refinancing comes with a number of costs, many of which are invisible at first. Here are some of the hidden costs. Appraisal costs. Application fees. Document processing fees. Tax transfer fees. Just to name a few. One thing to look out for is “No-Cost Refinancing”, this just means that those fees will take the form of higher interest rates, which really isn’t something that you want.
Step Five: Gather All Of Your Paperwork
Print the statements and your pay stubs. You need that, but you’ll also need to print out whatever else the lender says that you need. This one can be tricky, because almost all of us do our financial business online, but it is something that you must do.
Step Six: Have Some Cash On Hand
All of this stuff costs a bit of money upfront. Property taxes. Insurance fees. Closing costs. Not to mention a number of other expenses that are exclusive to the package you are purchasing. Having cash on hand is necessary, so remember to do that before doing anything else with the refinance package and the lender.
Max Akin Writing 