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Questions You Must Answer Before Refinancing Your Home
Homeowners have a variety of reasons for refinancing their homes. Before you make a decision about refinancing your home, you might consider the following questions. Below is a summary of an article inRISMedia by Michele Lerner, a writer for Bankrate.com.
What are my financial goals? Are trying to lower your monthly payment? Check out an online mortgage calculator to estimate your new payment. Other homeowners are choosing to refinance for a shorter term to pay of their mortgage faster and save interest.
Before you make the decision to refinance, the professionals advise making sure you contribute to retirement savings and college savings, pay off high-interest debt, and save 6-12 months of expenses, because reducing your mortgage payment period will increase your monthly payment.
Do I have equity in my home?
You need at least 20% equity in your home to qualify for a new conventional loan without payment private mortgage insurance. The alternative might be applying for an FHA loan that requires much less equity.
Do I have good enough credit?
Credit scores are critical under the new federal lending guidelines. Below a score of 620, you will have trouble qualifying for a new loan at all. It takes a score of 720 or better to obtain the best interest rates.
How long ... more
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