How is your Credit Score looking?
The better your credit, the lower the mortgage rate will be. If you’re interested in refinancing so that you are paying less over time, you’ll want to make sure you look like a low-risk to your lenders. It probably doesn’t make sense to refinance if your credit score is in less than tip-top shape because your rate will be directly related to your risk of defaulting. The better your credit history, the lower your risk of defaulting on the loan over time.
Just like we recommend that you leave your credit score alone during the closing of your new home, you also won’t want to make any large purchases, open any new lines of credit, or have any changes in employment as they can put your loan at risk.
What is the cost to refinance?
The cost of refinancing could be worth it when it means you are saving substantial money or gaining equity in your home, but you should expect to pay for these expenses that are embedded in the cost of the loan:
- Insurance costs
- Home Inspection fees
- Appraisal fees
- Title search costs
- Prepaid interest
- Application fees
- Attorney’s fees
- Mortgage broker fees
If these fees are going to outweigh the savings you’d receive, it may not be a good time to refinance.
Are you ready to shop around?
You should comparison shop for the lowest rates. You also want to make sure you go with a lender you trust and who has a great reputation. We are here to serve YOU, so you’re in the driver’s seat when it comes to picking the company you have confidence in.
Have you looked into different types of home loans?
If you have an FHA loan and have built equity in your home, it might be a good time to consider refinancing with a conventional loan. Check out our blog comparing FHA and Conventional loans and keep in mind, you may qualify for VA and other types of loans as well. Make sure you talk to your lender about your options and they can help you discover the best route.
Can you recognize common mortgage and refinancing scams?
You need to have consistent communication with a lender you trust. There are a lot of mortgage and refinancing scams out there that can completely derail your hard work and savings. Be on the lookout, and if it feels fishy, trust your instincts and run. To protect yourself, you want to do the following:
- Read ALL the fine print. There are lots of documents to sign. Take your time, ask questions, and make sure you have all the information
- Research your lender and any banks and companies you will be working with during your refi. Make sure you and your lender are maintaining consistent communication and they are familiar with who you are doing business with as well.
- DO NOT TRANSFER TITLE to any business offering to another company claiming to be making your payments for you.
- Don’t pay additional upfront costs. Your lender should work with you to make sure they are built into the mortgage
Are you ready to do your research?
Do not go into this process lightly. It can be just as complex as buying a home in the first place and you want to be careful that you are making a choice that will serve you in the long run. The lenders at EPM are ready to answer your questions and work with you to make sure you are protecting your biggest asset, and making a choice that will serve you. We can also help you explore all of your options in case of financial hardship. Contact a lender at EPM today to get the ball rolling and explore whether it’s a good time for you to refinance your mortgage.