Refinancing Your Home
There are many reasons that you might want to refinance your home. These reasons could include needing a lower interest rate, wanting a longer period of time to pay your loan off, or you need a cash payout to pay for a vacation or some sort of emergency. There could also be other reasons, but these are the most common among them. Most people who have refinanced their homes have chosen one of these reasons to do so.
If you have never refinanced your home before, you might need some instructions on hvordan søke refinansiering, or how to apply for refinancing. There are a few steps that you need to know about. If you follow all the steps the process should be easy for you.
This article will help you to learn how to apply for refinancing and the steps that you should follow. It will also help you to learn more about refinancing and how to avoid some issues that you might incur. You may need to do more research to find out more information, and that is easy to do. You can just Google the information that you are looking for, for instance, the interest rates or home prices in your area.
How to Apply for Refinancing
1. Set a Clear Financial Goal – You need to decide why you are wanting to refinance your home to begin with. Do you want to lower your monthly payment, or see if you can get a lower interest rate, or do you want to use your home equity for repairs or other reasons? These are all good reasons to refinance, but they require you to go about refinancing slightly differently. You will need to look at different things to refinance for these reasons. If you are refinancing to lower your monthly payment, you must remember that you are starting your interest out again, so you will really be paying more in interest through the time of the loan. This might be okay for you if you are cashing out your equity for an emergency or for home remodeling.
2. Check Your Credit Score and Credit History – You will want to check your credit history and credit score. If your score is too low, you might rethink your refinancing, at least for a little while. If you must refinance now, you can look at your credit history to see what you can fix. If there are bills that you have failed to pay, pay them or make arrangements to pay them. If there are mistakes on your history, call the credit reporting service and let them know about them. You can check your credit history here and you can do it once a year: https://www.annualcreditreport.com/index.action. You will need a credit score higher than 600 to be able to get a good loan with good interest. If your score is lower than that, your interest rate will be too high for you.
3. See How Much Home Equity You Have – You want to see if you have enough equity in your home to see if refinancing is even worth it. You can figure out your equity by taking the amount that you still owe and take that away from what your home is worth. For example, if your home is worth $300,000, and your still owe $150,000, you will take 300,000-150,000 = $150,000. That means that you have $150,000 in equity in your home. If you have this much equity, it would be worth it for you to refinance. You could refinance your home with as little as 5% equity, but lenders like that number to be closer to 20%. If your equity is more than 20%, it will be easier for you to get the refinancing loan.
4. Shop Multiple Lenders – You don’t want to go along with the first mortgage company you come across, unless you have a good history with them. If you go with the first lender, you might not see a great reduction in interest rates or payments. You also might not get as much cash back if that is what you are looking for. Once you have chosen a lender, see when you can lock in your interest rate so that it doesn’t change while you are waiting for your loan to close. Other things that you want to look at are the fees that are included and see if they can be rolled back into the loan. Some lenders even offer refinancing with no closing costs. See if you can find a lender that can offer that to you.
5. Get Your Paperwork in Order – Make sure that you have all your paperwork in order – you can ask the lender in advance what paperwork you will need. Usually this consists of your recent paystubs, tax returns, lender statements, and whatever else the lender may ask you for. If you have all this paperwork in order before you start the loan, you will not waste time looking for it later in the loan process. This can help your loan process to go along faster, as well.
6. Home Appraisal – You will need another home appraisal on your home before you refinance. You want this done, especially if you have made major improvements in your home since your first appraisal. Major improvements could include kitchen or bathroom remodels. You want to have an independent appraiser do the appraisal to make sure that the results are fair to you and to the lender. Check here to see why an appraiser is important. They will see what your home is worth in today’s market, and they will compare your home to others that have been sold in your area. You will be spending few hundred dollars for an appraiser, but it will be worth it if you can get more money for your equity payout.
7. Closing Cash – If you have to pay closing costs, make sure that you come to the table with the money. You might need to pay up to 5% of the amount of your loan. You might be able to roll those costs back into the loan, but this is something that you need to find out about before your closing date. If this is possible, the lender might raise your interest rates to compensate. They might even have extra fees that you will have to pay for this to happen.
8. Closing on Your Loan – This will be very similar to closing on your mortgage the first time. You will sign the final paperwork, you will pay the closing costs if there are any, and you will get a check for your equity if that is what you were refinancing for. The biggest difference is that you will not be handed a set of keys for your home.
9. Keep Tabs on Your Loan – Once you finalize your loan, you want to store your paperwork somewhere safe. You also want to set up automatic payments to make sure that your loan is paid on time each month and helps to make sure that you are never late. If you check with your lender, they might even offer discounts to your payments if you sign up for autopay. You want to make sure everything is in order before your first payment is due to take full advantage of any discounts. You will also want to keep tabs on your loan even after you have closed to make sure that the payments stay the same, and to make sure that there are no other fees added.
You can refinance your home for many reasons, including reducing your monthly payment, lowering your interest rate, or tapping into the equity of your home. There are several steps that you must follow to make sure that you are doing things the right way. If you are able to follow the steps, it should be a fairly simple process, and you should be familiar with the process because it is very similar to how you got your mortgage in the first place. The biggest difference will be that you can have a check in your hands or money deposited to your account after refinancing instead of paying your money as you did for your first mortgage.
You need to be careful when you refinance, and you don’t want to choose the first lender that you find. You might even want to find a different lender than who you used to get your initial mortgage. You want to find a better interest rate, and better fees that can be attached. You want to make sure that you are truly saving money in the long run or getting the most out of your equity. You also want to make sure that you keep up with your payments and look into autopay to see if you can get a small discount when you pay monthly. These are all important things for you to remember when you are refinancing your home.