Refinancing your mortgage can be ideal for lowering your interest rate, whether you are a new homeowner or have had your mortgage for a long time. It can even help you save more money through monthly payments and void costly mortgage insurance. In other words, this process allows you to get a new loan to pay off your existing debts. To seize the opportunity of switching to a better loan, here are the steps you need to follow to take advantage of a mortgage refinance:
Identify your reasons for refinancing
Before starting the refinancing process, determine why you have to refinance and figure out whether it makes financial sense to save money and time. You have to know precisely how much money you will save and how refinancing can improve your financial situation. All you need to do is compare your existing loan’s breakdown with the loan you are trying to secure, and then complete a breakeven analysis to see how fees will affect your finances. Begin applying for refinancing if you think that it is a wise choice.
Check your credit score
Your credit score highly affects your loan application, so make sure to review your credit right away. Identify any errors in your credit reports that can derail the refinance process and have them corrected. Check for any accounts that show late payments. Moving forward, you should avoid making big-time purchases that can significantly hurt your credit score to show that you are a responsible borrower.
Request quotes from lenders
Look for different types of lenders, like established banks, credit unions, and online lenders. You can also ask your friends and family for recommendations and inquire about who they have borrowed from and have good refinancing experiences.
Once you narrowed down your list of lenders, reach out to them and gather information about loan programs. Take note of their features, fees, and interest rates. Ask about all of the available options and request quotes.
Apply for loans
Apply for loans by following the instructions provided by lenders and filling out forms. They will ask you about yourself and your finances, so make sure you are prepared to give the details they need. Keep in mind that you have to answer as accurately as possible to prevent any delays.
When applying, you may encounter lenders who are not curious about your financial situation. While it is tempting to work with them since they require minimal paperwork, it may mean that they do not evaluate loan applications carefully. They are not sure whether or not you can repay your loan, so they tend to charge higher rates. You should avoid working with these kinds of fraudulent lenders.
Decide which type of loan to get
Once lenders reply to your loan application, compare all of the offers and figure out which one works best for your needs and budget using a loan calculator. Move forward with your chosen lender once you have decided which loan suits you the most.
Conclusion
Refinancing your mortgage can help you save money in the long run. The entire process can be stressful and time-consuming, especially if this is your first time refinancing. Fortunately, you now have a better idea to do this. You just have to follow this step-by-step guide and reach out to trusted mortgage brokers like us.
If you need help with mortgage refinancing, consult Benjamin Group Lending. We run a mortgage brokerage firm, and we offer a diverse portfolio of loan products that best the financial situation of our clients in and around Southern California. Contact us today to get started in refinancing your mortgage!
