If you are paying off a mortgage, refinancing could help you save money… but timing is everything. You want to make sure you get the best possible rate. You also want to make sure refinancing is the right choice for you. Watch as Robert Brown, Loan Officer for Rock Mortgage in Bentonville joins Good Day NWA to talk all things “refinancing.”
Home loan interest rates fell to historic lows during the past two years. Homeowners might be wondering if they have missed an opportunity to refinance. What advice would you give them?
- It is definitely not too late to take advantage of historically low rates to refinance your mortgage. In fact, it’s the best time in 9 months or so to refinance.
- Home loan rates are hovering around the record low they hit earlier this year.
- In addition to looking at rates, there are other things to consider when deciding if refinancing is the right move for you right now.
- Costs associated with a refinance, your personal financial situation, and how long you plan to stay in your home all factor into the decision.
- My best advice is for you to talk to your mortgage lender about your options.
What are some of the most common reasons to refinance?
- You might consider a refinance in order to:
- reduce your monthly payments,
- shorten the length of your loan,
- build equity faster.
- If interest rates are lower or your credit rating and financial situation have improved since you received your current mortgage, you could reduce your monthly payments and spend that money elsewhere.
- You may want to secure a mortgage with a shorter term. Shorter-term mortgages typically have lower interest rates than longer-term mortgages because you’re paying back the loan in less time.
- The downside is that your monthly payment will likely go up. Ultimately, a shorter-term mortgage can result in big savings for a homeowner if there’s room in the monthly budget for it.
- With rates low like they are now, you may be able to move from a 30-year to a shorter-term mortgage and experience only a slight increase in your payment.
- We have a refinancing calculator at www.rockmortgagelending.com that can give you an idea of what you might be able to achieve.
Can you share some additional potential benefits to refinancing, some that might be less obvious?
- Refinancing can be a great option for some of the reasons we mentioned earlier. It can also be a great solution if you are looking to convert from one type of mortgage to another. If your current mortgage is no longer the right fit, refinancing can help you obtain a different loan type.
- For example, if you currently have an adjustable-rate mortgage and seek the security of a set interest rate and stable monthly payment, you could change to a fixed-rate mortgage. It depends on how long you plan to be living in your home.
- Another option that might be right for you is a cash-out refinance, which requires a new mortgage loan that pays off your old loan and gives you cash at closing. You may have equity in your home that you would like to use for investments, home improvement or to pay off high-interest debt
If a homeowner is interested in refinancing, what is the first step?
- Much like purchasing a home, you want to take a look at your finances.
- Get your credit score in order. The fastest way of doing this is to pay down your credit cards or other high-interest loans down below 30% or even 10% and waiting until those new balances report to the bureaus would help a lot for credit score.
- Doing this will show banks that you are a responsible borrower and it will ultimately lower your credit score giving you lower mortgage rates.
- Then, get pre-qualified. This is a very important step because it estimates the amount you’ll be able to afford to borrow on your refinance loan.
- To run good numbers on a refi’s all we really need is your most recent mortgage statement and your insurance page showing what you pay and when it’s due next. We can look up property taxes to run good numbers with escrows from there.
- I encourage you to start with a conversation with your mortgage lender.
- You need a mortgage lender you are comfortable with, who can serve as a trusted advisor. When you have the right team, the process will be smoother and faster.
- If you are looking for a lender, I and my colleagues at Rock Mortgage would be happy to help
How can homeowners reach you if they’re interested in refinancing?
Reach out to a mortgage lender. It’s important to find a lender that you feel comfortable with because you will be giving them a lot of sensitive information. Feel free to reach out to one of our mortgage lenders at Rock Mortgage to get the conversation started.
For more information, visit www.rockmortgagelending.com or call 479.321.3355.