As with buying a house and getting a purchase home loan, refinancing your existing home loan comes with some preparation – or at least it should, for your best possible refinancing experience. Here are our top recommendations for steps you should take to get ready to refinance.
At Crystal Clear Mortgage, we can help you explore your refinancing options
Get your credit in order.
If you’ve been a bit late on making any loan or credit card payments, be sure to make an effort to start paying on time every due date. You may want to set up automatic payments through your checking account to make sure payments are made on time. If a lack of cash is the problem, review your budget and cut spending where you can and consolidate high-interest debt if needed. But don’t close credit accounts just before applying for a refinance, as doing so can hurt your credit score.
Take it easy on the equity.
If you plan on getting a cash-out refinance, carefully assess just how much you’ll need. List out the specific goals you have for the cash and the money you’ll need for each – and take out only the equity you’ll truly need. Taking out more equity than you really need can cause your loan principal – and therefore your payment – to be higher than necessary.
Time it right.
If you’ve recently already refinanced your home or if you plan to move in the near future, wait for a better time to refinance. Understand that refinancing resets your loan term – to 30 years, for example – and give you a payment that is low but puts more of your payment toward principal than you realized. The end result could be more of your money going toward finance charges. An expert lender at Crystal Clear Mortgage can work with you on selecting the term and timing that’s just right for your situation so that you benefit financially over the life of the loan.
Know your value.
When you have an accurate understanding of your home’s value, you are better able to structure a home refinance that meets your needs. For example, if your home is worth more than you paid for it, you’ve got extra equity in your home that can benefit you during a refinance. It can help you eliminate mortgage insurance or qualify for lower rates. Many loans require that you obtain a home appraisal for a refinance, and this is important. But for those loans that don’t require it, you may want to invest in one anyway.
Shop for the best loan.
Not all refinance loans are the same. And not all lenders are equal, either. Homeowners who shop for the best refinance loans tend to find better rates than those who don’t – and even a half a percentage point in savings can really add up over the life of the loan.
Here at Crystal Clear Mortgage, we can help you take all the steps you need to have a positive and rewarding refinance. Give us a call for advice on how to get started.