Refinancing your home can be a great way to save money on a mortgage and take advantage of lower interest rates. But, as with any major financial decision, you need to know what you’re getting into before you sign on the dotted line. After speaking with experts and digging through data they have found the best refinance tips for homeowners who want to save on their monthly payments.
Know Your Credit Score
You should know your credit score before you apply for a mortgage. Having an idea of where you stand will help you negotiate with lenders and could even improve your chances of getting approved. A good credit score indicates that you are a reliable borrower, which is essential when applying to refinance your mortgage.
Your credit report contains information about all of the payments made on loans that have been issued in the past seven years, as well as any recent inquiries about new lines of credit. As per experts like SoFi, “Your credit score can impact your refinance rate, monthly payments, closing costs, and mortgage refinancing options.”
Your FICO score uses this information to determine how risky it would be for a lender to do business with you based on what has happened in the past (and present).
Understand Your Equity
When you are refinancing, it’s important to know the difference between your loan balance and your home’s value. If your home’s price has increased significantly since you purchased it, then you may have a high loan balance.
This means that if you were to refinance, lenders would be wary of lending on such high amounts with lower interest rates offered by other lenders. On the other hand if your home was purchased at an inflated price and its value has fallen (or not appreciated as much), then it’s possible that there mightmore equity in the property than what is owed on the mortgage contract.
Understanding No-Closing-Cost Refinances
If you’re wondering how to refinance without paying closing costs, the answer is simple: a no-closing-cost refinance. A no-closing-cost refinance is available to people with good credit who have been making on-time payments for at least 12 months.
Although this kind of loan comes with some restrictions, it works well for borrowers who need to lower their monthly payments but don’t have enough cash on hand for other types of refinancing options.
Make Upgrades Easy To Find
If you’re looking to refinance, you first need to make sure that any upgrades you want are easy to find. This can be anything from adding a new appliance or upgrading your air conditioning unit.
It’s important that these options clearly laid out for refinancing customers, so they know what they’re getting into exactly before signing on the dotted line.
Set Yourself Up For Appraisal Success
As you’re preparing to refinance, there are some things you can do to help ensure that everything goes smoothly. One way is to ask your lender if they have any preferred appraisers, home inspectors, termite inspectors and roofers.
If they don’t offer up these contacts on their own (or if you feel like giving yourself an extra safety net), reach out directly with the names of people who have done good work for friends or family members and ask for their recommendations.
The key to refinancing is to prepared. The more you know about your finances and your options, the better off you’ll be when it comes time to get a new mortgage. So, if you haven’t already taken this step, now is the time.