Hello Kathy - Here Are Your Articles for Friday, January 20, 2017
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Kathy Healy
Kathy Healy
Broker Associate
(630) 567-6345
kathy@kathyhealy.com
1772 S. Randall Road
Geneva, IL 60134
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8 Steps to Get Ready for Your Refinance

 

There are many benefits to refinancing your home. Refinancing can decrease your monthly payments, lower your interest rate, and shorten the length of your loan. Essentially, refinancing is getting a second mortgage to replace your first. If the terms and conditions are better than your original mortgage, it is a great way to save money and have your home paid off more quickly. Just as with your first mortgage, it is important to properly prepare before refinancing. 

Check out the list below of eight steps to take to get ready for your refinance.

1.     Compare Interest Rates. Before you refinance, it is important to be sure that it will benefit you financially. Compare the interest rate of your original mortgage with current interest rates. While it may seem that a lower rate automatically equals savings, it is important to keep in mind the costs of refinancing. The cost of application fees, loan origination fees, inspections, and legal fees can add up quickly.

2.     Establish When You Will Begin to Save. Once you have figured out the interest rates and costs, establish a time line of when you will actually begin saving money. Use an easy online calculator, like this one, to figure out when you will see savings.

3.     Calculate Your Total Savings. Determine how much you will save by shortening the length of your loan. Figure out the cost of your current loan, and compare it with the new loan. This will help you calculate the total savings of refinancing.

4.     Determine Your Home's Value. It is important to determine your home's value in order to determine whether a lender will be willing to refinance. By figuring out your home's value, you can determine your loan-to-value ratio. The higher the loan-to-value ratio, the higher the risk of the loan. Be sure to check tax assessor's information; price other, similar homes in the area; and check out estimates from online realty sites such as Zillow prior to paying an appraiser.

5.     Get Your Credit Score. Your credit score is a huge determining factor when it comes to financing. The higher the score, the more attractive you'll be to lenders. Know your score in order to better understand how you will be perceived by lenders.

6.     Speak to Several Different Lenders. It is important to shop around for the right loan. Don't accept the first offer you receive. Be sure to take your time and speak to several different lenders to find the best loan for your specific situation.

7.     Decide Whether It Is the Right Time to Move Forward. After reviewing all the factors mentioned in steps 1 through 6, you can determine whether refinancing is the best option for you.

8.     Get Your Financial Information Together. If after reviewing all factors you have decided to move forward with refinancing, it is time to gather your financial information. Collect pay stubs and tax documents. Write up a list of your assets and your outstanding debts. Having all this information together will help the financing process to move more quickly and easily.

If you would like assistance in determining whether refinancing is the right decision for you, please contact me. I'm here to assist you with all your real estate needs in any way I can.

 
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The information provided in this email newsletter is for general guidance only, and does not constitute the provision of legal advice, tax and accounting advice, real estate investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional real estate, tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Home value estimate calculators provided herein are general estimations based on publicly available data and should not be used as a substitute for a professional appraisal. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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