Why Should You Consider Refinancing
Car Loans and a home mortgage loan paid on time each month show lenders you’re responsible with money management. If you can qualify to get lower interest rates, refinancing your mortgage can save you money. Free copies of your current credit report can be obtained through Equifax, Experian, and TransUnion.
Qualifying to Refinance at Lower RatesKnow how much equity you have in your home. Anywhere between 5% up to 20% or more will make home refinancing a good option. Paying off any smaller debts you might owe can help you qualify for a new mortgage at lower interest rates.
Your debt-to-income ratio allows lenders to know if you can afford a new home refinance loan. Your income, work history, and credit can strengthen the chances of you being approved for a new loan. The goal is to keep your total monthly debt on all expenses less than 40%. Lenders like to see that number be less.
Interest rates can be different from those you choose as lenders for refinancing options. Learn who offers the best rates in your area before you choose which company to work with.
When Refinancing Your Home Makes SenseSeveral reasons might influence you to consider refinancing your home mortgage. You might want to stay in your home over your lifetime. Paying on a new mortgage in fewer years can help you achieve that goal.
You may want to refinance your existing loan to cash in on the equity you already have in your home to pay off other smaller loans. Some people do this to reduce the number of other debts that they owe. Refinancing is a good option if you have many medical bills, credit card debt or a second mortgage on your current loan. Refinancing your home loan makes sense if you can free up more income to save money.
Thinking About A Reverse MortgageThis type of mortgage refinance can be a great option for you if you’re 62 years of age or older. A reverse mortgage can free up money in your home to use for medical bills and any other monetary uses you might need it for. It allows the elderly to live their golden years in the comfort of their own homes.
You can receive monthly income from your home if you want a reverse mortgage with a variable rate. You only need to repay the money if you pass away, leave the home due to medical reasons or move out completely.
You can receive funds through this loan in a lump sum. People who choose this type of mortgage borrow only a portion of the equity or total value of the home. Both a lump sum and variable-rate reverse mortgage loan are paid back with the sale of the home or other reasons stated above. Think about all your options when deciding what type of home mortgage loan is best for you.