Are you looking for a way to lower your mortgage payment, get cash out, or pay the balance of your home loan off sooner? If the answer to any of those questions is yes, consider refinancing your mortgage. Before you make any decisions, make absolutely sure that you understand the terms of your existing loan. If you can’t find the original documentation to reference, your loan servicer can supply the current terms.
If you just let out a big sigh, you’re not alone. Hardly anyone likes to think about mortgages, and it’s certainly easier to just submit payments every month regardless of whether you are getting a good deal on your current mortgage. But what if things could be better? You won’t know until you investigate your options and talk to a mortgage lender — and stop putting it off!
Here are five things to consider when thinking about refinancing your home:
1. Your Interest Rate
If you can get a lower home mortgage rate by refinancing, then it might be something to actually consider doing — especially if it could reduce the life of your loan. If you can go from a 30-year loan to a 15-year loan with just a slight increase in your monthly payment, then it could be a good option.
2. The Term Of Your Loan
Do you want to retire? Are you looking for a less-stressful job that might pay a little less? Regardless of the reason, are you very eager to pay off your mortgage? Consider refinancing to change the term of your loan. Weigh potential benefits, like shifting from an adjustable rate mortgage to a fixed rate, getting cash out, lowering your monthly payments, or getting a lower interest rate — any of these things could be a good reason to refinance.
3. Whether Your Loan Has A Fixed Or Adjustable Rate
Some homebuyers start with an adjustable rate mortgage (ARM) because they are attracted to the lower payments, but when the first rate adjustment is about to hit, some homeowners might think it’s a good idea to refinance to a fixed-rate mortgage. Check out your lender’s closing costs before making your decision to make sure refinancing makes sense for you.
4. Your Credit History
Did you have some ugliness on your credit report in the past? Did a financial mistake keep you from qualifying for a better mortgage rate? If you have cleaned up your credit history, your credit score might have improved. Talk to a mortgage lender, because you could be eligible to refinance and get a lower rate.
5. What Type Of Loan You Currently Have
Maybe the last time you went through the mortgage process you did not qualify for a conventional home loan. Or maybe you did not have enough cash to use as a down payment and had to pay for mortgage insurance. To change your loan product, consider going through a refinance. If you no longer need to pay mortgage insurance, then consider refinancing your loan.
So when should you refinance your home? Figuring out the best time to refinance can be complex; besides the items listed above that need thorough consideration, you should also plan to factor in closing costs of a new loan, tax implications, and your overall financial health.
Talk with one of Mr. Cooper’s mortgage professionals about your personalized options. Who knows? You might have some room for financial improvement.