One of the biggest decisions you might have to make regarding your home is whether or not you should refinance your mortgage. Refinancing your mortgage can be a successful financial transaction if properly handled. However, the wrong decisions could result in financial troubles. Before financing your home, here are some considerations to make.
Should You Refinance?
There are several reasons you should consider refinancing. Some homeowners choose to refinance to get a lower interest rate. Others might opt for a longer term loan.
You can also opt to refinance your home if you want to take advantage of low interest rates and get a shorter term loan. As a result, you can pay off your home quicker. This is especially rewarding if you have extra cash available and can put it towards your mortgage payments.
Another reason for refinancing is to switch to a different type of mortgage product. For instance, if you have a mortgage with an adjustable interest rate, you can switch to a fixed rate with a new mortgage.
If you fit any of these situations, refinancing could be in your best interests.
What Do You Need to Do to Refinance?
The refinancing process starts with your credit history. Even though you qualified for the original loan, your current credit situation is important. Your credit history is necessary to determine what interest rate you qualify for. The mortgage servicer also uses it to determine how likely you are to pay back the loan.
Obtain a copy of your credit history before applying for a new mortgage. You are entitled to receive one free report from Annual Credit Report each year. Although you can choose to obtain all three reports from the major credit reporting bureaus, you should consider taking just one every four months so that you can better monitor your credit. Ensure that the report is accurate. File disputes on any debts that are inaccurate.
Once you feel your credit is ready, you can start to apply for mortgage loans. You are not limited to applying for a loan through your current servicer. You can obtain rates from different lenders by providing basic information. It is also important that you talk to your current servicer. The servicer might be more willing to give a better rate to a customer who has proven reliable.
Consult with a mortgage servicer, like Bank of Blue Valley, to receive additional help with assessing whether or not refinancing is a good option for you and to find out rates from different servicers.