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There are several factors to consider when deciding if refinancing makes sense. With very few exceptions, the reason to refinance is to improve your life or help you achieve a goal. Possible reasons to refinance include:
This allows you to receive cash based on the equity you have in your home.
If interest rates have gone down or your credit situation has improved, you may be able to refinance at better terms…which can mean a lower payment.
If you are paying mortgage insurance and your home has increased in value, you may be able to refinance and eliminate that monthly MI payment.
If paying off your mortgage sooner and saving interest is a goal, then you may consider refinancing into a shorter term.
If you are currently in an Adjustable Rate Mortgage (ARM), you can eliminate payment uncertainty by refinancing into a fixed rate mortgage.
Life move pretty quick. Your situations and goals change over time based on your family, career and even the economy. The economy affects mortgage interest rates, home prices and financing options.
If you are like most people, your mortgage payment is your largest financial obligation. It makes sense to periodically do a quick assessment to make sure your current mortgage is still the best option.
When considering your goals, you will most likely need some additional information. Don’t worry, these are things you already know or can easily find out. The key to a smart refinance decision is having a clear goal and accurate information in mind.
After considering the reasons why to refinance, the next step to gather some information. Having this information will give you the confidence you need to make the best refinancing decisions.
This is a large component that will help determine your interest rate and eligible loan products. Generally, the higher the score the better. You can check your credit score online quickly and in some case for free.
Truly is happy to check your credit scores at no cost. We have the ability to do a ‘soft credit check’ which will not affect your credit score.
If you have a current mortgage statement, that should give you all the information you will need. The key numbers are:
Keep this information handy. It is important to compare your current mortgage against any new mortgage proposals.
At this stage in the process, you will want to have an estimate of how much your home is currently worth. There are several online websites that aggregate home value information, such as Zillow, Realtor, Redfin and many others. These sites provide free information and do not require any personal information. Please keep in mind these values are estimates. You may want to check several and take an average of the values provided.
In most cases, any Lender will require an appraisal be performed to confirm or establish the value of your home. The appraised value will be used to finalize your new mortgage terms, including any cash-out amount.
The last major factor is to consider affordability. This is referred to as your ‘Debt-to-Income’ ratio. This is a fairly formal way of measuring all your monthly debt payments divided by your gross monthly income.
For example; If your mortgage payment is $1,050 a month and another $550 for the rest of your debts (such as credit card debt, auto loans and student loans), your monthly debts would equal $1,600. If your gross monthly income was $5,000, then your DTI ratio would be 32%.
The higher the DTI ratio, the more of your income is required for bills. Most lenders and loan programs require that your DTI ratio should be below 50%. The DTI ratio is a good tool to make sure a new mortgage is affordable and fits in your budget.
The first step is sharing some information about yourself. By creating an account, you can securely complete this process online.
Depending on your goals and needs, we will help you find the perfect refinance loan solution tailored to your needs.
Get your loan approval online without having to talk to a human... but we'd love to talk to you anytime you’d like.
Locking your interest rate protects you in case rates change.
We make closing easy, on-time and no surprises.
Refinancing your mortgage can seem slightly overwhelming. Don’t worry, we are here to help. Whether you prefer to use our online process or work with a human, there are there are no obligations. Our approach is to be completely transparent and give you a complete understanding of your options.
Ready to take the next step in deciding if a refinance makes sense?
