Mortgage rates have dropped and it is a great time to refinance to get in on a great rate! Refinancing may strengthen your financial position. Here are 8 things to know before refinancing.
- Know your target. Same term, lower interest rate? Cash out, how much? Has your loan amount been reduced sufficiently to allow for the removal of mortgage insurance payments?
- Better credit = better interest rate. Check your credit history, be informed.
- Investigate your home’s value. Pay attention to similar home sales in your neighborhood, this should provide a good indication of your home value.
- Know what is important to you. Is where you make your payment important? Lowest fees? Lowest interest rate?
- Know your all-in costs. A home loan refinance comes with fees and each lending institution charges differently. If possible, compare Loan Estimates provided by each lending institution. There are options for a “no-cost refinance”. Buyer beware, normally this loan approach moves the upfront fees into your current loan balance (increasing your loan amount) or, the interest rate is higher, to cover those fees.
- Consider how long it will take for you to break even on the fees and expenses.
- Decide on whether to provide cash at closing or roll closing costs into your loan amount. In some cases, these costs can be added to the mortgage balance, which, on the one hand, limits your upfront costs but, on the other, increases what you owe on your home.
- Gather paperwork. Consult a mortgage loan officer to provide a checklist of the most commonly required items.
Ready to visit about refinancing your home?
Call one of our loan officers to visit about refinancing opportunities. We are here to help.
Our Lending Team
Phone: 605.331.2889 Sioux Falls | 712.472.2537 Rock Rapids
Member FDIC | Equal Housing Lender