How to Refinance Your Mortgage
Perhaps after financing your 20-years mortgage, you thought you would never apply for it again. However, due to the ever sliding rates of mortgages, it may make sense to refinance your home again. Refinancing your mortgage is the process of taking a new loan to replace the already existing one. So, in this mortgage refinancing scenario, let's visualize how you can do so.
Set a clear financial goal
It would be best if you had a concrete reason why you want to refinance. Whether you want to reduce the interest rates, build your home equity, or reduce the repayment period.
Check your credit score and history
Approval for a mortgage refinancing depends on whether your credit score meets the required standards. In case you have not reached the criteria, you can talk to the lender on the best methods to boot your credit score.
Determine how much home equity you have
Work towards increasing your home equity. The more home equity you have, the less risky the loan will be to the bank or the lender.
Shop for multiple lenders
Get quotations from different lenders and compare them in terms of interest rates and costly fees.
Be open about your finances
Before refinancing, the lender will assess your creditworthiness. They will scrutinize your assets and. Gather all your financial documents like bank statements, tax return files, pays lips, and present them upon request. Prepare for the appraisal. The lender will assess to determine the current market value of the home, which is done at a fee
Come to the closing with cash
After the loan estimate, you will need to pay a certain amount of money from your pocket for the closing disclosure.
Keep tabs on your loan
Set up an auto payment to remain updated on your mortgage. A lower interest rate will be given to you by the lender when you automatically sign up for an auto payment.
Refinancing is a significant financial move. Mostly, it reduces the amount of your monthly payment, shortens the repayment period, and helps you increase the rate at which you can build your equity. When refinancing is done carefully and correctly, it will help bring your debt under control.
Sources and Citations
https://www.mortgagecalculator.org/helpful-advice/what-is-a-refinancing.php
