Are you planning to refinance your home? Refinancing your mortgage can be the right financial decision. In order to reap the benefits of refinancing, homeowners need to do research. Homeowners need to educate themselves on current refinance rates and industry trends. Deciding on refinancing can be challenging. The following checklist will help you decide whether it’s the right time to refinance or not.
Mortgage Loan Refinancing Checklist
Here's a checklist of important questions you should be asking yourself before deciding to refinance your mortgage.
1. How many years do you plan on staying in your home?
There are expenses associated with refinancing home loans, which include application and lenders’ fees, title insurance, prepayment penalty and much more. One of the benefits of refinancing is that you’ll end up with lower monthly payments. In order to reap the benefits of a lower monthly payment, you’ll have to stay in your home for a long period of time, so that your new monthly savings add up to more than what you’ve spent on refinancing costs.
2. What's the interest rate on your current mortgage?
The most important reason homeowners choose to refinance their mortgage loan is to lower their mortgage interest rate. Lower interest rate will result in paying less over the life of the loan and can lower your monthly payment.
3. What's your credit score?
Lenders examine and verify your ability to pay back home refinance loans. Your bank statements, paychecks and investment records, tax returns, and a personal monthly budget should not show more than a certain percentage of your income being spent on debts, including mortgage and property tax. Your credit score needs to be adequate. Check all of these requirements before applying for a home refinance loan.
4. Are you currently paying private mortgage insurance (PMI) premiums?
Dropping private mortgage insurance can significantly lower your monthly payments and make refinancing even more profitable. It’s important to speak to your refinance mortgage provider about mortgage insurance.
Read Also: FHA Streamline Refinance FAQ’s
5. Does your current mortgage have any prepayment penalty?
If your current mortgage has a prepayment penalty, then you have to add them to the additional costs of refinancing.
6. Do you have money to invest?
If you’re refinancing a mortgage loan because you need money for other purposes, then this question doesn’t apply to you. However, if you’re refinancing your mortgage loan for a low-interest rate or reduced term, then you’ll benefit from refinancing your mortgage loan.
If you want to refinance your mortgage loan for a low-interest rate or reduced term, Drew Mortgage Associates, Inc. can help! Drew Mortgage Associates, Inc. is a Boston Mortgage Lender that can help you refinance with low-interest rates or reduced loan terms. Drew Mortgage’s loan officers will help identify refinancing loans that best suit your financial needs. If you have any questions regarding refinancing your home loan, contact Drew Mortgage Associates, Inc. today!