Refinancing a mortgage is the process of replacing your current home loan with a new one, thereby getting a better interest term and rate. Having the option to refinance can help homeowners, especially those with good credit, pay their loans off faster. Refinancing can also help make monthly payments more manageable. As a local mortgage broker in Colorado Springs, refinancing is one of our specialties at The Reichert Mortgage Team. We believe in educating homeowners about all the options when it comes to their home loan, which is why we’ve created these helpful tips. If you’re considering refinancing your mortgage, here’s what you need to know.
1. Act Now
Mortgage rates are constantly fluctuating. If you’re asking yourself, “Should I refinance?” The answer is yes, and now. The longer you wait, the more of a gamble you are taking with increasing rates. The best first step is to talk to your local mortgage lender and see what opportunities are available currently. You might be paying more than you could be, but you won’t know if you don’t ask. Since mortgage rates are so volatile it is also important to know what your current interest rate is and what the average rate is in your area.
2. Check Your Credit
For those with good credit, refinancing is the best way to go. A credit score of 720+ is your best option, but 620+ still looks great to lenders. If your credit score has gone up since the original loan, or if you’ve maintained good credit over the years, refinancing might allow you to have much better rates. However, be careful not to mess with your credit during the loan application process. Lenders usually check the credit score again right before approving the loan, so be sure to watch your credit accounts, especially if you are on the edge.
3. Try Different Loans
One way to make sure refinancing is worth it is to talk with a lender about your options. There are many different loans you could refinance to. For instance, if you’re currently on an adjustable-rate loan, you may want to consider a fixed-rate loan so that payments are more consistent. On the other hand, an adjustable-rate historically has lower rates, so it may be more beneficial to switch to this. Other options include looking at government loans (such as FHA or VA loans) which provide competitive rates. The point is to stay flexible when considering financing, reviewing all options available to you with a lender. If you want to know what home loan is best for you, give us a call at The Reichert Mortgage Team. We can help assess your unique situation and see what loan would benefit you the most during refinancing.
4. Change up the Time
Another option to consider is changing the loan period when refinancing. As an example, if you have a 30 year fixed loan, after five years you could switch to a loan period of 15 years if you are financially stable. This ultimately saves you money. On the contrary, you could also choose to extend the loan if payments have been hard to make, shortening payments per month. However, each of these poses their own risks, so it’s important to consider the options with a qualified mortgage professional.
5. Cash Out
One reason many people consider refinancing their home is to “cash out.” Cashing out in refinancing is the process of taking out a larger loan than what you already have. This allows you to not only repay your old loan, potentially improve your terms and rates, but also have additional cash to use as you please. This is a risky option, however, because the value cashed out is usually not that high and loan payments can increase. But if your home is worth it to cash out, then this could be incredibly valuable to you. Talk to your mortgage lender to see if this is a good option for you.
Looking to Refinance? | The Reichert Mortgage Team
The Reichert Mortgage Team is proud to be your local mortgage company in colorado springs and a resource for all your mortgage needs, including refinancing. Our expertly trained mortgage professionals are skilled in providing mortgage solutions for refinancing and can help you way your options whether they are conventional loans, FHA loans, VA home loans, home equity loans, and much more. As a mortgage broker in Colorado Springs, we can help answer all your questions and see what options you qualify for when it comes to refinancing your home loan. Contact us today for a consultation!