4 Common Questions About Home Refinancing
Are you considering a home refinance to take advantage of the low-interest rates? If so, you will likely have the following questions before you decide to move forward.
When Should You Consider Refinancing?
Just because you can get a lower interest rate doesn't necessarily mean that you should refinance. It must make sense based on what it is going to cost you in the end. You must look at what the break-even point is on the refinance. Your lender should be able to look at the current point that you are at in your loan, the cost of refinancing, and let you know when you will start seeing savings.
What Is Required To Refinance?
Be aware that refinancing is essentially like qualifying for a brand new mortgage. You still need to provide the lender with pay stubs, W2s, and documentation of your assets. You'll also have your credit score run and make sure that you still qualify for the loan, even though you currently have a loan. If you ran into trouble over the years where you missed mortgage payments or you had financial problems that are on your credit report, you may find it difficult to get approved for a refinance.
What Should You Look Out For When Refinancing?
Some lenders promise that they can refinance your home without closing costs or other additional fees, so it's important to understand what is happening with these costs. Sometimes they are simply added to the loan amount, which makes your loan bigger and your monthly payments higher. Some people prefer this if they do not have the cash up front, but other people prefer to pay for these costs right away so they are not paying interest on them for the length of their new loan.
Do You Need To Refinance The Whole Amount Of The Home's Value?
It's possible that you are looking to refinance your home for a very specific reason. You may have an investment that you want to make, and want to add your home as a way to secure that money. If you have credit card debt, you may want to refinance so that you can borrow money at a cheaper interest rate and pay off your high-interest debt. In these situations, you won't be using the full value of your home, and that's okay. Your lender is going to have upper and lower limits of how much cash you can pull out of your home by refinancing.
For more information, contact a refinance mortgage service near you.