Because mortgage interest rates have dipped to historic lows during the past couple years, many homeowners are in the market to refinance their mortgages. As you look through the Dex Knows listings, you’ll see many options for lenders to help you refinance: banks, national lending companies and local credit unions, among others. Here are a few tips to help you choose the right lender and get the best deal.
Before you begin calling around, have at hand the information the lender will need. This includes your income, outstanding debts, home equity, amount of money in your bank accounts and other assets. The lender may require an appraiser to determine the current market value of your home.
Improve your credit report if possible
Order a copy of your credit report. Because a good credit score will be a key factor in determining whether you are able to refinance, check the report for errors or outstanding payments that you can fix before potential lenders look at your credit score.
Call several companies and ask about their available loan rates for refinancing. Because rates can change rapidly depending on many factors, it’s important to call these companies over a short time period. Once you gather the numbers, you can call back the companies with the most favorable rates for more information.
Tips & Warnings
- Currently, there are more consumers trying to remortgage their homes than lenders can handle, so the refinancing process can take longer than you think it should.
- Because of the upfront costs of refinancing, doing so makes the most sense if you plan to keep your home for many years. If you plan on selling soon, you may want to keep your original mortgage.
- Some companies offer no-cost refinancing (known as no-cost re-fis), but read the fine print: Though you’ll save in upfront costs and fees, these loans usually come with a higher long-term payment rate.
- If your home is on the market, or has been in the past 12 months, many lenders will reject your refinancing application.
- Remember that you are “restarting the clock” when you refinance. How good a deal it is will depend on how long you plan to stay in the home. You may want to discuss this with a financial advisor or your real estate agent.
- Q: What is cash-out refinancing?
- A: This refers to refinancing your home for more than you currently owe, in order to receive an upfront payment of the difference.
- Q: Should I work with a mortgage broker to get the best refinancing deal?
- A: An independent mortgage broker can help you strengthen your application and find the best refinancing deals, but you’ll have to decide if the broker’s fees fit within your budget.
Category: Real Estate