A Brief Guide to Mortgage Refinancing in 2018
A lot may have changed since the last time you applied for a mortgage. Get the information you need to make the right financial move.
Refinancing your mortgage has many obvious benefits. It can help you lower your monthly mortgage payments, pay off your home loan faster and save money. But it can also turn out to be an expensive mistake if you refinance at the wrong time or don’t choose the correct lender. So, how do you know if refinancing your mortgage is the right financial move for you? And how do you find a lender you can trust?
1. Determine your goal
Lowering your monthly mortgage payment is usually the reason most people refinance their mortgage. But a lower monthly payment doesn’t necessarily mean that you’ll save in the long term. Compare how much interest you’ve already paid on your old loan with how much you’ll pay with the new one to get a better idea of your total lifetime loan cost.
2. Improve your credit score
A better credit score means better interest rates. If you have poor credit work on improving it before seeking to refinance your home loan.
3. Shop around
Heading online for a mortgage is now common practice. Online lenders have introduced convenience and automation to mortgage lending – allowing potential homeowners to apply in minutes, compare rates at a glance, shop around with ease and most importantly, save money.
Here are the 3 best resources to start with:
LendingTree is a loan marketplace that matches borrowers with the most relevant lenders. Fill out one loan application online, hit submit, and LendingTree will send your application to its network of over 350 lenders (they only work with reputable lenders, such as Bank of America and Discover Home Loans). Once you decide on the right lender for you, the application continues with a mortgage rep who ensures you’re fully involved in every step in the process.
JG Wentworth entered the mortgage business in 2015 and have been growing at a solid pace, adding a wide variety of different loan options to their menu of offerings. Their refinance options include traditional rate-and-term refinancing and cash out options. They use proprietary technology to streamline the application process to drive down costs and increase efficiency. And their customer service has earned them a glowing A+ rating from the Better Business Bureau.
Quicken Loans is the nation’s largest online retail mortgage lender. The process begins with an online application and then switches over to a mortgage representative who will guide you through the process over the phone, answering any questions and laying out all of your available options.
4. Understand all of your costs
One reason refinancing might not be your best option is because of all of the fees and closing costs that are involved in securing a new home loan (application fees, origination fees, tax transfer fees and several others). The total fee amount will differ based on which lender you choose, which is another important reason to shop around.
Refinancing your mortgage can improve your financial situation and save you money in the long term, but it’s important you are refinancing at the right time, for the right reasons, and at the right rate. Otherwise it could be a costly mistake. If you want more information, check out our rundown of the top lenders in the industry