When done correctly, refinancing your mortgage can save you thousands of dollars in interest over the life of your loan. Interest rates are the lowest they’ve been in the past couple of years and continue to drop. Are interest rates significantly lower than when you got your mortgage? Then it may be time for you to consider refinancing your mortgage.
Determine your goal
There are three different types of refinance loans: rate-term, cash-out, and divorce. Keep reading to determine which is the right fit for you.
Our clients generally choose rate-term refinances to lower their monthly payments. Monthly payments can be lowered one of two ways, either by extending the life of your loan or lowering your interest rate.
Clients that tend to lengthen the life of their loan are often planning to stay in the home for the entire duration of the loan. By extending the term, your monthly payments will be greatly reduced.
For others, it’s a good idea to keep the loan’s term the same and simply save on your monthly payment with a lower interest rate. With current interest rates, many of our clients that bought their home in the past 2-3 years could greatly benefit from a refinance. Click here to learn more about rate-term refinances.
A cash-out refinance is a type of refinance that allows you to leverage your home’s equity for cash. Unlike other refinances, your loan amount actually increases instead of remaining the same. Many choose this type of refinance to pay for big-ticket items like vacations, home renovations or paying off credit cards. Learn more about cash-out refinances here.
Refinancing during divorce is a common practice when one party would like to continue living in the family home. Refinancing during a divorce basically takes your spouse’s portion of the loan and adds it to what you owe.
In order to consider refinancing during divorce, you must be able to qualify for the mortgage with only your income and credit score. Alimony or spousal support can also be used to help qualify for the mortgage, but only if the divorce settlement states you will continue to receive payments for at least three more years. Click here to learn more about divorce refinances.
Check your credit
As with obtaining a mortgage, your credit score is extremely important when you’re refinancing. It can ultimately make or break your ability to obtain a lower interest rate. The good news is that if your credit score isn’t where you want it to be, we can work with you to increase it before committing to a refinance.
Know all of the costs
Your lender will provide you with a Loan Estimate which lays out all of the refinancing costs. Refinances aren’t always the cheapest option in the beginning, but once you hit your break-even point (when your savings from a lower interest rate surpass the amount it cost to refinance) you will begin to reap the benefits.
Gather the necessary paperwork
As with when you first obtained your mortgage, you will need to collect the proper paperwork before your loan can be refinanced.
Here at Mortgage Specialists, we want to ensure that refinancing your mortgage is in your best interest. If you have questions about refinancing your mortgage, please give us a call at (402) 991-5153 whenever is most convenient for you. We will work around your schedule to make sure your refinance goes as smoothly as possible.
Don’t have any questions? Fill out our online application to begin the refinance process. The application takes most clients under 20 minutes to complete and you’ll hear from us within a few hours of submitting the application.