Published on: September 14, 2021
The real estate market is affected by numerous variables. However, it’s primarily influenced by supply and demand and the general perspective on market performance. Currently, the global pandemic’s impact is sending real estate owners into a panic with their properties.
With other sectors facing uncertainty, banks and other credit entities are using different strategies to maintain and attract clients. This leads to lower interest rates at the current price of market offers. These low rates can be a golden opportunity for homeowners, especially if they want to get out of their existing mortgage terms.
Before Your Refinance Your Mortgage
Refinancing your mortgage is the process of obtaining a lower interest rate by getting a new loan from another lender. It’s also a great way to top-up your original loan amount to buy out your property earlier. Since this financial strategy can only be efficient in certain circumstances, you need to prepare before committing to it properly.
Before you commit to refinancing your mortgage, here are four things you should do.
1. Shop for Options
Although mortgage rates are generally lower during economic crises, that doesn’t mean they’ll all have the same reduced rates. For this reason, don’t feel too pressured to lock in an advertised offer. Since refinancing your mortgage is a major commitment, you should always check out the competition to get the best rates possible.
2. Look at the Overall Cost
It’s vital to look at the big picture and not just the offered interest rates for any loan. Mortgage companies may advertise a surprisingly low rate but become considerably more expensive when considering their other fees. Be sure to inquire about further details like origination fees, credit reports, and other expenses before applying for a loan. Thankfully, you don’t have to commit to an offer for getting these details until you receive your Good Faith Estimate.
3. Watch Your Mortgage Terms
Most homeowners commit the mistake of locking into another 30-year mortgage after refinancing from a 30-year mortgage. Even if the new loan terms are lower, the borrowers are still years away from owning their properties.
Remember that your goal in refinancing is to reduce your overall expenses. This also applies to shortening your loan period. If you’re spreading your loan for a longer period, you’re more likely to spend on interest and other charges, which can accumulate into a hefty fee. Remember that your act of refinancing should benefit you in the long term by finally owning your home.
4. Compute Your Potential Savings
Refinancing your mortgage isn’t a cheap financial strategy, primarily because you’ll need to pay high closing costs for it. This is why you need to knock down at least a full percent off your current rate to get the best value out of refinancing. If you’re not getting at least that much, you’re potentially wasting your money doing little to no changes to your current loan payments.
Conclusion
Going through a refinancing process is far from easy. You’ll need to pay out closing costs and handle tons of paperwork before your new loan can take effect. Since you should only refinance your mortgage at the best opportunity, you need to find the right timing and loan offer for it. For this reason, you should look for mortgage providers to help you find the best rates you can refinance to.
Our team at PENNIX Mortgage can give you the best loans to match your financial needs, whether you are refinancing your mortgage or purchasing your first home. We offer competitive pricing matched with superior customer service to ensure a smooth loan process. IF you;re looking for a mortgage broker in Cumming, GA, contact us at 404-451-1250 today!
