You’ve heard the news that refinancing your home can save you a ton of money in the future. It’s likely that you’ve even heard some of your family and friends talk about how they’ve been redoing their mortgages. If you’re considering refinancing your home, here are some necessary questions you’ll want to ask before signing on the dotted line.
What’s Your Reason For Refinancing?
Homeowners can have many reasons for considering refinancing their home mortgage. You may want to take advantage of a lower interest rate, you may want to pull equity out of your home, or you may want to lock in a fixed rate instead of keeping a variable one. Each one of these goals can be achievable with a refinance. However, you should have a clear idea of what your desired outcome is going to be before you start the loan process. This way, you can be assured that the refinance terms you get fit your overall desired outcome.
What’s Your Credit Like?
Before you try to take advantage of better interest rates, you’ll need to assess your credit score. That pesky little score can alter your ability to get the best financing options out there. You’ll want to aim for a score that’s in the excellent range. If you can enhance your score in the short-run, you should do so before applying. There are various ways to quickly improve your score. The most obvious is paying down credit cards.
Know Your Out-Of-Pocket Expenses
Refinancing a home doesn’t come free. The new lender is going to charge you fees to set up your new loan and assess things like your credit score. It’s a good idea to talk with the lender before starting the loan application process to become aware of the fees that you’ll need to pay to complete the refinance. In some cases, you may not be able to wrap in closing costs into your loan amount. This means that you’ll be responsible for paying them out-of-pocket. This can get pretty costly depending on the amount of your loan.
When it comes to refinancing your home, it can be a great option to help you achieve your financial goals. This holds true when you take the time to consider how the refinance is going to assist you and verify that you can afford to do it. The above are three of the many questions you’ll want to consider before you agree to a home refinance.