Are you intimidated by refinancing? Here’s what you need to know so that you can go forth with confidence!
First and Foremost, Ask Yourself Why You Want to Refinance
If you don’t have a good reason to refinance, there’s no need to go to the trouble of doing so. But if you have a situation that requires a change to your mortgage, then a refinance can be very helpful.
Do you want to refinance so that you can save significantly on your mortgage rate and monthly payments? Or do you want to pay off your mortgage faster? Will a refinance help you consolidate your debt? Do you need to cash out some of your equity to pay for essential needs? Figuring out your goal is the first step!
Next, Get An Idea of the Type of Loan That Will Help You Reach That Goal
Now that you’ve determined your goal, there are different loans you can look at based on your specific needs and goals.
Do you need a cash-out refinance or rate-and-term refinance? Adjustable-rate or fixed rate mortgage? Do you want to take credits or pay points? Your loan consultant can help you with these decisions so that you can meet your goal for refinancing.
Figure Out If Your Finances are Ready to Handle a Refinance
You’ll get the best refinance loan if you have a high credit score. If your credit score could use some help, we’d encourage you to spend some time improving your credit score before you apply for a refinance. You will also need to pay off any outstanding tax liens before you’re allowed to refinance.
Get Your Paperwork in Order
Remember the paperwork you had to hand in for your mortgage? You’ll have to do it all over again in order to refinance. If you want to be ahead of things and help the process go super-quickly, go ahead and make sure you have easy access to your last 2 years of tax returns and W2s or 1099s, along with your last 2 months of bank statements.
Get Your House Ready for the Appraisal
In order to refinance, the lender will need to know your home’s market value. This requires a home appraisal. For good results, you’ll want to make sure your home is in its best condition! This means meeting all safety measures (like having appropriate smoke detectors), making all necessary repairs, getting rid of clutter, and making cosmetic changes where needed.
Relax and Refinance!
Now you can sit back and relax, knowing you’ve done everything you could to make the refinance process go smoothly! Your refinance lender will get to work finding you the best loans and rates.