By: Amber Hunt
If you’re thinking about refinancing, you may be hesitating because you are intimidated by the process. The mortgage industry collapse and unpredictable financial markets have created some new obstacles for borrowers. However, these hurdles can be easily overcome with a little research and preparation.
Here are some of the things to be ready for and some tips on how you can prepare yourself to go through the refinance process with ease:
1) Credit Score – Know your credit score and work to improve it before you refinance. If your credit score has dropped since you got your mortgage, it could have a drastic impact on your interest rate, or whether you’ll be able to refinance at all. There are many ways to bring your credit score up; read up on tips for increasing your credit score. To take a look at your credit score for free, check out Quizzle.com.
2) Appraisal – Your current home value is a key component of the refinance process. Homeowners looking to refinance are often worried that their home will appraise for a lower value than they expected. It’s important that you do your homework so you aren’t solely relying on the information provided by the appraiser. More appraisers are working in areas they aren’t familiar with and that often means they are going to undervalue the property.
3) Condos – Condo owners can be faced with additional challenges when they are looking to refinance. If there are multiple foreclosures or short sales in a building it becomes very difficult to get a good appraisal for a property. However, even with a poor appraisal, a condo owner still could have equity in their home and be able to qualify for a refinance.
It’s important to work with a Home Loan Expert that you trust when you are looking to refinance. The right person can help you navigate through the refinance process and help you find the option that works for you. Now is a great time to refinance to benefit from low interest rates. Refinancing and locking in a lower rate can easily save you thousands in the long run.
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This article was originally featured on Quicken Loans Mortgage News, where personal finance writer, Amber Hunt, specializes in writing about mortgages and helping people refinance.
When putting information on the website regarding current mortgage my current situation grades out as a B or B- but when I indicate my goal is to payoff my home sooner it attempts to get me to look at refinancing when I have a 5% fixed and am looking to pay off in under the next three years. Anyone have a take on this one?
Hi @T-bird! I assume you’re talking about the home loan recommendations in Quizzle? We give you loan recommendations based on your personal situation and goals. If you want to lower your payment, we will provide you with loan options that do just that – if they’re available. If your goal is to payoff your mortgage sooner, than we provide you with loan options that have a shorter term than your current mortgage – if they’re available.
If you’re interested in paying off your home loan in less than three years, then refinancing may not be the best option for you. However, with rates in the 4% range right now and your current rate at 5%, it’s possible that it’s worthwhile to refinance into a lower-rate loan, pay off your loan in three years anyway, and save money on the interest you’re accruing in those three years.
The best way to determine if refinancing makes sense for you is to contact a trusted home loan expert to review your unique situation. Good luck – and please let us know if you have any other questions!