Other than allowing you to become a homeowner, what's a great thing about a mortgage? The fact that you can replace your contract with another as you see fit. Not having to stay locked into your original terms gives you tremendous financial flexibility, as you can refinance your mortgage to suit your changing needs.
That being said, most refinancing situations come with upfront costs. How can you secure a new contract in a timely manner, one that helps you save? Here are five mortgage refinancing tips that save time, money, or both!
1. Know Why You're Refinancing
You can refinance your mortgage to accomplish any number of things, like owning your home sooner, reducing your monthly payments, or even eliminating mortgage insurance. But if you're not sure why you're starting the refi process, that can add days or even weeks to your overall timeline. Different goals come with different interest rates and monthly installments. Changing your mind halfway through the process may mean you'll need to start from square one.
Did you know that some lenders specialize in different types of refinancing? Knowing your goals can help you find a suitable lender in a more timely manner. When it comes to refinancing for a more competitive interest rate, time is of the essence. Knowing what you hope to accomplish from the refi means that the appropriate process can get started that much faster.
2. Have Documents Ready to Go
What does this mean? You:
- Have reviewed your credit report for any errors
- Have recent pay stubs & bank statements
- Have W-2 forms
- Have your partner's financial information, if refinancing with someone else
All in one place, ready to be handed over to your lender. Remember, you're trying to establish that you're able to manage money. Anything that shows how you've successfully done so should be ready to be reviewed by your lender. In many instances, refi delays stem from the borrower's lack of preparedness. Eliminate unnecessary back and forth by anticipating what a lender will ask for.
3. Prep Your Home
Time & Money Saver
Did you know that many refinancing options require a home appraisal, which the borrower is usually expected to pay for? Lenders want to know how much your home is worth so that they can ensure you're not looking to borrow far more than the home's value. If the loan amount is higher than the value of the home and the lender still decides to move forward, you may have to pay private mortgage insurance.
If the appraisal works out in your favor and your home is valued high, you could get a competitive interest rate or eliminate private mortgage insurance if you're currently paying for it. Therefore, it's vital that the appraisal goes well.
So, how can you protect or even boost your home's appraised value? Check out these three low-cost upgrades that do just that. By spending some time sprucing up your home before beginning the refi process, you'll set yourself up for success and have one less thing to worry about.
4. Compare, Compare, Compare
What do savvy customers do before signing a contract? They get in touch with more than one provider and compare every aspect of their offers.
Never take the first offer that comes along! While it could end up being the most competitive, you'll never know if you don't compare it to what else is out there. Before you get one offer, be sure you're ready to explore multiple.
Did you know that by rate shopping within a certain time frame, you can protect your credit score?
That's because many credit scoring models will treat multiple inquires on your credit report as just one, making your score take less of a hit. The rate shopping window can be different for various scoring models but generally falls between 14 to 45 days. It's best to complete your inquires within your rate shopping window, which means you'll need to do some research and be prepared before you start contacting lenders.
Many aspects of a mortgage refinance offer can be negotiated, especially if you've already done your comparison shopping and have offers from multiple lenders. Having more than one offer gives you serious negotiating power, which can be used to possibly secure a lower interest rate or reduced closing costs.
Don't be fooled into thinking that the offer on the table is the final one. All too often, homeowners never question the numbers. Multiple quotes from lenders mean that you have options, and if you've taken care of your financial health up until this point, you have more power than you realize. You've established yourself as a trustworthy borrower, one who is capable of managing money. Be sure you're being rewarded for that!
Connect With a Refi Provider Today
What better way to get a feel if refinancing is right for you than to review a few offers from lenders? With help from Lendgo, you can do just that, right from your home. If you are seriously considering a refinance, now is the time! Current interest rates are at historic lows, and as lenders fight for business, closing costs are successfully being negotiated down.
Refinancing can be very beneficial and to make it even more beneficial and cost-effective, be sure you know why you're refinancing, have all pertinent documents ready to be reviewed, prepare your home for an appraisal, compare offers, and don't shy away from negotiating. You could have a money-saving new contract in hand in no time!