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Necessary Steps to Take Before Mortgage Refinancing
Financial crisis affects everyone, but not everyone can easily escape the clutches of financial burden. Home mortgage refinance can be a viable option for those who are struggling to pay high interest rates and would like some financial leeway. While mortgage rates are at an all-time low, there are a few things you need to consider before heading to your mortgage broker.
Check Your Credit Score
From the first credit card you apply for to the moment you consider home loan refinance, your credit score rises and falls. When you are thinking about home mortgage refinance, you should consider what your credit score looks like before refi and what shape it will be in after the many inquiries sent by mortgage brokers. You can obtain one free credit report a year through each of the three leading credit reporting agencies. Peruse your credit reports before considering refinancing; a good credit score is one of the best weapons in your arsenal for obtaining the lowest mortgage rate.
Decrease Your Debt Burden
Paying off or minimizing your debt is essential for raising your credit score as well as obtaining the lowest mortgage rates. Although using your credit card for daily spending or high priced expenditures is sometimes inevitable, it is best to keep your total credit card debt under 30% of your credit limit. Doing so will help ensure a higher credit score and, in turn, help you obtain lower interest rates than your high-debt/low-credit score neighbors.
Evaluate Your Existing Mortgage
Before you consider refinancing, take a good look at your current mortgage. Since refinancing does not come without associated fees, you should determine if the benefits you will reap outweigh the costs of refinancing. To do this, add up all of the closing costs you will be required to pay and divide that number by the amount you will save on your monthly mortgage payment. This calculation will yield the number of months it will take to recoup your closing costs. Determine if the length of time you have to wait to experience savings from refinancing is worth the upfront investment.
Learn the Trade Secrets
In addition to diligent financial planning, you should also learn the basics of refinancing. It is true that you can receive numerous benefits from refinancing your home. Unfortunately, there are mortgage lenders that just want to take advantage of your mortgage refinancing needs. They know you aren’t an expert in the field and prey on your vulnerability to obtain unnecessary kickbacks or victimize you using predatory lending practices.
Now is the time to fight back. With the expert guidance of a retired mortgage broker, I have created risk-free informational videos that will get you on the fast-track to understanding home loan refinance. It is important for you to be aware of the tricks up your lender’s sleeve.