How To Refinance A Home
When interest rates drop, many homeowners rush to the bank to lock in a lower rate on their existing home loan. When interest rates rise, those with variable rate loans begin to seek refinancing options on their homes as well. When you think it might be time for you to refinance here is how to refinance your home.
Determine the Value
Use a free mortgage payment calculator to see if it is even worth refinancing before you begin the process with the bank. Unless interest rates have fallen two percent or more below your current loan value, it’s unlikely the monthly savings would offset the cost of the loan itself. Some refinancing calculators will take you through the estimation process in greater detail, but remember to factor in closing costs on the new loan if you’re simply comparing two mortgage payments.
Shop for Loans
When you’ve decided you’re ready to commit, begin shopping for loans. Speak to your current bank to see if they have a special rate for existing customers and be sure to browse online banks to see if those rates are lower than brick and mortar financial institutions. Find the loan with the lowest rate, but be sure to weigh the amount of fees and closing costs along with the interest rate to find the best deal.
Apply for the Loan
When you apply to refinance your home, you are essentially applying for a new mortgage. This means you’ll need almost as many documents to refinance as you did to buy your home the first time. Work with your lender to complete the application and be sure you’ve cleaned your credit and established a savings account with money for closing if you’re not taking cash out of the home’s equity.
Complete the Refinance
Refinancing can take months if the paperwork and approval process drags, but most refinances are complete in less than a month. Work closely with your bank to ensure you’re on top of all paperwork and have given the underwriters and officers everything they need to successfully approve your loan.
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Posted in Business & Finance, Real Estate
