Refinancing? Have You Thought About THIS Yet?
Throughout 2020 you may have heard the term "refinancing" thrown around a lot when it comes to home loans. Many have sought to do this due to the lower rates being offered this year. However, refinancing is not for everyone, but if it's something you are considering, our mortgage lenders at the Lake of the Ozarks encourage you to speak to an experienced lender first before making any major decisions. It's best to have all your answers upfront so you know what you are getting into. You should also keep reading this week's blog for a few things to consider before choosing to refinance.
YOUR CURRENT HOME LOAN TERMS.
It is possible that there is a prepayment penalty on your current mortgage. When you refinance, you are paying off your current mortgage. Check to see what the conditions are of your current loan. Add the prepayment penalty to your other cost of refinancing to get an accurate figure on what your total cost to refinance will be.
YOUR CURRENT CREDIT SCORE.
Your credit score plays a big role in refinancing, just like it did when you took out your first mortgage. Borrowers with a 720 or higher typically do not have a problem taking out a mortgage, if they qualify in all other aspects of the mortgage application process. You do not have to have a 720 credit score to qualify to refinance, but the higher your credit score the better rates you will qualify for.
YOUR REASON FOR REFINANCING.
Before you decide to refinance your home, you need establish clear goals on what you hope to accomplish by refinancing. Do you want to lower your monthly payment? Are you hoping to shorten the term length of your mortgage? Do you want to switch form an ARM (adjustable-rate mortgage) to a fixed rate?
After you decide what your purpose is, make sure to keep your goal in mind so you can make the best decision. Refinancing can be beneficial, but if you don't set goals you could end up in a worse situation than you are with your current mortgage.
THE COSTS OF REFINANCING.
There are costs associated with refinancing you may not have considered. You will have to pay closing costs to the lender for things such as an appraisal and home inspection. These fees could cost you thousands of dollars. If your goal is to lower your monthly payment, it could take several years to offset those costs. If you are not planning to stay in your home long-term, refinancing may not be the best option. However, if you are planning to stay in your home for years to come, refinancing could save you a lot of money long-term. Closing costs could be a minimal expense compared to how much you will spend on your current mortgage terms over an extended period.
Ready To Refinance?
Give us a call today! MHQ - Mortgage Headquarters can be reached at the phone number listed below. You can also follow us on our social media channels listed below to stay up to date on our latest announcements. Refinancing isn't for everyone but it may be for you! Find our more and come visit us, we're ready to help!
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