What to Keep in Mind Before You Refinance

Not unexpectedly, rates in the mortgage world are constantly changing.  After a few years (or months) in your current mortgage, refinancing could be a good financial move for you. We are here to walk you through what refinancing could mean to you.

Analyze Your Current Situation

Prior to refinancing, it is important to take a look at your current mortgage and financial situation.  Take note of your existing term length, interest rate, annual percentage rate, debt-to-income ratio and how much equity you have in your home.  These aspects are going to be important as you determine if refinancing is right for you.

For example, you may have a fixed rate or adjustable rate mortgage, which will make a difference in your refinancing options based on the current market rates.

Also, while analyzing your current mortgage, consider the equity you have in your home and whether you’ve taken a second mortgage on your home.  Depending on your specific situation, these factors could present different possibilities for you.

What Are Your Homeownership Goals?

The next factors to keep in mind are your goals as a homeowner.  Ask yourself questions like: what do I want my monthly payment to be? What is the ideal mortgage term length for me? How long do I plan to stay in this home? Keeping your goals aligned is important as you begin to analyze your options.

Set Yourself Up for the Future

Ultimately, understand what refinancing would look like for you.

Just like for your initial mortgage, it is important to know your credit score (for more information on why your credit score is important click here).

When it comes to refinancing, there are two different paths you can take – a cash-out refinance or a standard refinance. Your mortgage loan officer will help you look at these various options to determine which is right for you based on your current and future needs.

Finally, similar to closing on your initial mortgage, there are various costs associated with refinancing.  Talk to your loan officer to get a better idea of how these costs will apply to you.

Wondering if you are in the right position for a refinance? Reach out to a loan officer to talk through your options!