The Best 5 Tips for Refinancing Your Home

If you’re considering refinancing your home, there are a few things you need to know. First, refinancing typically involves taking out a new loan and using the proceeds to pay off your existing mortgage. This new loan will have different terms than your current mortgage, so it’s important to understand what you’re getting into before making any decisions.

There are a few different reasons why people refinance their homes. Some people do it to get a lower interest rate, which can save them money over the life of the loan. Others do it to shorten the term of their loan, which can help them pay off their mortgage faster. And still others do it to consolidate their debts.

If you’re looking to refinance your home, there are a few things you’ll need to keep in mind in order to get the best rate possible on your loan. Here are some easy tips to help you snag a great rate:

Get Your Credit In Shape Before You Apply for a Refinance Mortgage

Get your credit score in tip-top shape before you apply for a loan to refinance your mortgage.

A great credit score is like gold dust when you’re applying for a mortgage. Lenders will be falling over themselves to offer you their best deals if your score is good.

But what exactly is a credit score?

Your credit score is a numerical representation of your financial history. It’s used by lenders to assess how likely you are to repay a loan or credit card debt.

In the US, there are three main credit reference agencies: TransUnion, Equifax and Experian. These companies keep financial records on everyone in the country who has ever applied for credit.

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Lenders will use this information to work out your credit score. They’ll also look at other factors, such as your employment history and income.

A good credit score is anything above 700. A bad credit score is anything below 600.

What If My Credit Score is Bad?

If your credit score is bad, don’t despair – there are things you can do to improve it.

First, get a copy of your credit report from all three credit reporting agencies – Equifax, Experian and TransUnion. Check the report for errors, and if you find any, dispute them with the credit bureau.

Next, focus on paying down your debt, especially any high interest debt. Make a budget and stick to it, so you can free up more money to put towards your debt.

Finally, make all your payments on time, every time. This includes credit card bills, utility bills, student loans and anything else. A history of on-time payments is one of the biggest factors in a good credit score.

Following these steps should help you improve your credit score over time. Remember, it takes time and patience to rebuild a bad credit score – but it can be done.

If you want to repair your credit more quickly, or with help – consider enlisting the help of a credit repair agency, who has the time and experience to raise your credit score quickly.

For more information about credit repair, click on this blog post we recently wrote about The Pros and Cons of Hiring a Credit Repair Company.

Consider a Shorter Loan Term to Save on Interest

If you’re planning on selling your home within the next five to seven years, you may be better off with a shorter-term loan such as a 15-year fixed-rate mortgage. Not only will you pay less in interest over the life of the loan, but you’ll also build equity in your home faster.

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A variable-rate home loan will have a lower interest rate than a fixed-rate home loan over the life of the loan. If you do choose a variable-rate home loan, make sure you have a plan in place to pay off the loan as quickly as possible. That way, if interest rates do rise, you won’t be stuck with a large loan balance that’s difficult to pay off.

Make Sure You Understand All The Fees Associated With Refinancing

If you aren’t planning to stay in your home for long, it might not make sense to refinance because of the fees.

The typical fees charged for a home refinance are:

-Application fee

– appraisal fee

– origination fee

– private mortgage insurance (if you are required to pay it)

– title insurance and escrow fees

– discount points

You will also have to pay for closing costs, which can include items like:

– title search

– legal fees

– recording fees

– loan payoff fees

You can wrap some of these fees into your new loan, but that will increase the amount of interest you pay over the life of the loan.

Be sure to ask your lender for a Good Faith Estimate, which is a breakdown of all the expected costs, so there are no surprises at closing.

You can also ask the lender to waive or reduce certain fees. For example, you might be able to get a waiver on the application fee if you agree to pay a higher interest rate.

Get Quotes From Multiple Lenders

Once you know what you need to qualify for a refinance, it’s time to start shopping around for the best deal.

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Get at least three quotes from different lenders. Compare the offers side by side to find the one that’s right for you.

Be sure to compare:

– interest rates

– loan terms

– fees

You can use an online mortgage calculator to estimate your monthly payments and compare loan offers.

When you’re ready to apply, be sure to have all the necessary documentation on hand, such as:

– pay stubs

– W-2 forms

– tax returns

The lender will also need a copy of your current mortgage statement, as well as your homeowners insurance policy.

Once you’ve found the right loan, it’s time to get started on the application process. The lender will pull your credit report and verify your employment and income. They will also order an appraisal of your home to determine its value.

If everything looks good, you should be able to close on your loan within 30 to 45 days.

Following these tips will help you snag a great rate on your home loan refinance and save you money in the long run!