Refinancing is a process of taking a new loan to pay your old home loan. It is a very valuable process, especially for long-term homeowners. Most often than not, when interests go down, homeowners rush to refinance their mortgages without certain planning.
Despite getting the hope of relief, homeowners end up with a bigger mortgage to pay. If you are thinking about getting your mortgage refinanced in Utah, better think about it now, and make sure to lock in a low rate.
Here are some tips that can help you with this process.
Prepare your paperwork
Prepare everything that the bank requires. It would be best to research everything before going up to them and asking for a refinance. Banks usually ask for your proof of income like tax returns, bank statements, and payslips.
Improve your credit score
Make your credit score strong. Improve it by paying bills on time, paying debts, and correcting errors on statements.
Pay more
It is best to save more and pay more than what you have to pay each month. You do not have to do it monthly, but ensure to make an effort in doing such.
Choose the right length
Think about how long you want to pay your new loan. Check how much you can commit per month. Remember that higher payments would mean shorter payment period and vice versa.
Pay “points”
Paying in “points” would help you lower your interest rate. One point is equal to one percent of your loan value. This means, paying one point can reduce your loan interest by 0.25 percent. This can be of value in the long run – long enough to eventually break even.
Shop around for lenders. Make sure to get the best rates possible. If your lender is demanding or is harassing you, withdraw your loan from them. There would be lenders who would be willing to do business with you without a commitment fee. When you do, lock-in your rates to be safe.