Imagine you found your dream home and found the best mortgage plan. Things seem fine, however; circumstances change in life. Now, you need to refinance the home. Well, refinancing is the process of obtaining a new loan to pay off an existing loan, usually at a lower interest rate and often with more favorable terms. Refinancing is typically done when the borrower has improved his or her credit score, the interest rate on the old loan has increased substantially, or when new features are added to the old loan product.
Now that you have decided to opt for refinancing your home, here’s a beginner’s guide that will help your refinancing journey quite systematically, and choose from the best mortgage lenders in Massachusetts.
Tips For Refinancing Your Home
Know Your Reason For Refinancing
When you refinance your home, you are taking out a new loan to pay off your existing mortgage. You may want to do this because you want to lower your monthly payments because you want to change the terms of your mortgage or want to increase the cash flow Some people also refinance when they sell their home and need money for a down payment on another one.
If you are thinking about refinancing, talk with a lender about what it would mean for your financial situation. There are many factors that can affect whether refinancing is right for you, so be sure to have this conversation before making any decisions.
Timing Is Important In Refinancing
Refinancing is good. However, if you are not careful about timing, you may end up paying more in the long term. For example, refinancing can trigger penalties or fees that were waived in the original loan agreement. Another risk is that it can be hard to predict future market trends and how they will affect your ability to repay the new loan. You should also consider factors in any closing costs associated with refinancing as these can add up quickly and make it difficult to repay. Traditionally, it is believed that your new mortgage rate should be lower than your existing mortgage by at least 1%. However, getting a deal at a 0.75% lower rate can also make a difference. Grab the opportunity when suitable.
Research & Compare Refinancing Options
The next wise step in refinancing is to find out if you are eligible for refinancing. You may be eligible if you have enough equity in your home, have sufficient income and have good credit.
Here are a few options to look for:
Fixed-Rate Mortgages: These are a type of mortgage in which the interest rate is fixed for a predetermined period of time.
Adjustable-Rate Mortgage: Adjustable-Rate mortgages are loans with interest rates that can change over time. The interest rate on an adjustable-rate mortgage is typically tied to a benchmark. The rate is then adjusted based on how much the benchmark changes over time.
Do research on these factors to prepare in advance.
- Loan amount
- Term length
- Interest rate
- Total closing costs
- Tax and insurance costs
- Repayment of penalties, if applicable
Choose the best mortgage lenders in Massachusetts
In the state of Massachusetts, there are a number of mortgage lenders you can choose from. You should keep in mind that your refinancing process will depend a lot on the mortgage lender you choose, their terms and conditions. We, Drew Mortgage Associates, are one of the popular and reliable Massachusetts mortgage companies. We understand refinancing can be a life-changing decision for the good. Our associates can help you with a smooth refinancing process at the best interest rates in the market. Get in touch with us to explore your refinancing options with us today.