7 Steps to Refinancing Your Mortgage
When you think it’s the right time to refinance your mortgage, there are some things you need to consider. Many people choose to refinance their mortgage to move from an adjustable-rate to a fixed rate. This can reduce your interest payments and save you money over time. For whatever reason you are considering refinancing your mortgage, these steps will help you complete the process.
When is the Right Time to Refinance?
The first thing you are probably wondering is when is it the right time to refinance? Well, you can consider refinancing when you want to switch from an Adjustable-Rate Mortgage (ARM) to a fixed one. As interest rates fluctuate over the years, switching to a fixed rate may be a good move for your financial state. Keep in mind that sometimes lenders require a 20% down payment.
Here are seven steps you need to take to refinance your mortgage successfully.
1. Set Your Goals
Why are you refinancing? You need to have a goal in mind to make sure you get into the right option. Do you want to reduce the length of your loan or lessen your monthly payments. Understanding which overall goal you are looking towards can help you acquire the best refinancing option.
2. Evaluate Your Financial Status
Before you even think about applying for a new loan, you need to consider your current financial status. Assess your debt to income ratio. Be sure you are in a good position to get the best loan terms with your refinancing. Consider your credit score since it impacts your interest rate. The higher your credit score, the lower your interest rate. If you aren’t in the proper position to refinance now, work on lowering your debt to income ratio and raising your credit score before applying for refinancing.
3. Calculate Your Equity
Now, you need to calculate your equity. The equity have accumulated in your home will determine your position to refinance. The more equity,, the better options you’ll have to refinance. You can build up your equity by waiting for some time and paying off some more of your mortgage loan to get a favorable refinance rate.
4. Shop Around
Look around for lenders and assess their rates to find one that serves you best. Each lender has different rates that can usually be found on their website or through a mortgage broker near you. Just because a lender has offered you a reasonable rate at first, does not mean you don’t need to look into it further. You should get quotes from different lenders and compare them to each other. They may vary on the requirements of credit score, interest rates, fees, and other costs.
5. Complete Your Paperwork Thoroughly
For better comparison and revisions, keep your paperwork organized and complete. This will help you when you have applied to multiple lenders and want to compare their interest rates and fees. You will need specific documents to apply, such as your bank statements, ID cards, credit score, tax returns, and other paperwork.
6. Finalize Your Lender
Once you find a suitable lender, choose your refinancing terms and fill out all the necessary paperwork to lock in their offer.
7. Close Your Deal
Your lender will provide you with closing paperwork. Once you sign all the legal documents, you’re done! Keep your paperwork on hand for any future issues or questions.
Contact All American Financial Services Today for a Free Consultation
If you want to refinance in Lancaster, All American Financial Services is here to help! Contact us today to schedule a free consultation and discuss your options.