If you’re thinking of refinancing your mortgage a few years later after buying a home in Salt Lake City, you may be wondering what the process entails. This only makes it important to do some research and know the pros and cons of taking the plunge. Mortgage refinance companies share a few tips on tackling the process:
Know your goal
Find out why you want to refinance your mortgage in the first place. Most homeowners do this to lower their payment. Just keep in mind that while refinancing your current loan to a longer-term mortgage, like a 30-year loan, could reduce your payment, it could also take you longer to pay off the balance and pay more interest in the long run. It is best to do this to reduce the term and obtain a lower rate.
Check your credit score
Get your credit reports and check your score. Just like the process of a mortgage application, lenders are more likely to offer you better mortgage refinance rates if you have a good credit score and history.
Compare refinancing rates
Score a better loan by comparing mortgage refinancing rates from different lenders. Just be sure to limit the window to a two-week period when submitting mortgage applications or allowing lenders to pull off your credit report, as doing so can negatively affect your score.
Know all related fees and set aside some cash
When you refinance a loan, you will need to pay a bunch of fees. These include application fees, document processing fees, origination fees, property taxes and insurance, closing costs, and many others. You can get an estimate of these fees from different lenders to have an idea of how much you need to pay.
You will need to collect, print, or download your financial statements, pay stubs, credit report, statement of assets, and any other documents required by the lender during the refinancing process. Use this checklist for organizing your paperwork.
Be wary of no-cost refinance deals
When lenders offer you a no-cost refinance mortgage, don’t just say yes without knowing the catch. This is because it could mean that the lender will move all the necessary fees to your ongoing costs, which could result in a bigger loan balance or higher interest rate.
Refinancing your mortgage can benefit you the most if you do it for the right reasons, with lower rates, or a reasonable loan term. Contact a reliable lender today to learn more about refinancing and your options.