Chances are that your local newspaper has advertisements from home
mortgage lenders advertising new, lower interest rates. You log onto your
computer and all over the internet you see ads for lower interest rates.
You might be wondering if it is time to consider refinancing your home.
Let us look at the best strategies for refinancing your home since interest
rates are lower.
- Calculate the
difference - the first thing you should do is determine how
refinancing your home is going to affect your monthly payments. Not
only should you consider how much your mortgage payment will change but,
you should also look at how it will impact your homeowner’s insurance and
your income tax. Since your mortgage interest can be deducted on
your taxes, determine the impact.
- Can you
consolidate? - if you have credit card debt or other debt that
you can pay off by refinancing your home, you should also calculate the
amount that you may be saving. There are mortgage calculators that
are available on-line that will help you determine (based on set rates)
how much your mortgage payment will be. Gather all of your credit
cards together, and sort them by interest rate. Write down the
current balances and use a credit card
calculator to determine how long it will take to pay them off if
you do not include them when refinancing your home.
- Contact a Realtor -
get an approximate market value of your property. Once you have
obtained a market
valuation (not to be confused with an appraisal) you
can determine if you are eligible for a refinancing of your home.
- Obtain your Credit
Report - before you take any further steps towards refinancing
your home, contact all three credit reporting agencies and request a copy
of your credit report. Remember, you may request one free
copy of your credit report every twelve months. Verify that
all the information on your credit report is accurate.
Once you have completed these steps you then can decide if you will
benefit from refinancing your home. The next best strategies come when you
begin discussing your situation with lenders. Here are some strategies for
helping ensure you get the best possible refinancing terms for your home.
- Contact your
current lender - if you currently have an adjustable rate
mortgage (known as an ARM) you should discuss with them the possibility of
refinancing to a fixed rate mortgage. Let them know how much work you have
already done in research. Advise them that you have done the
calculations (and at what rates), if you are paying off credit card debt
(known as a cash out refinance). Also let them know what you have
found out about the current market value of your home and any information
that might be pertinent from your credit report.
- Contact other
lenders - contact other lending institutions after you speak with
your current home lender (regardless of what they tell you) and find out
if you can get a quote for a lower interest rate. While these quotes
are usually non-binding until contract, they will give you some leverage
with your own lender. Make sure you provide these lenders with the
same information you provided to your lender (with the addition of your
current outstanding mortgage).
- Negotiate - there is usually room for negotiations with your lender. You may be able to get them to waive all (or some) of the closing costs, if you decide to stay with the same lender many times there are other fees they would consider waiving. You should attempt to get the best deal possible when you are attempting to refinance your home.
These are some of the best strategies to employ when you are
considering refinancing your home. After you have thoroughly reviewed all the
implications of refinancing your home, you will see that these best strategies
can help you successfully close the deal.