So, you are a homeowner. Congratulations! You know that low rates mean you can make lower payments if you refinance. If you’re thinking it is time to refinance your home, but you’re not sure where to start, here are five steps to help you make your decision.
Secure the best rate.
Talk to a mortgage professional to learn about the current rates. One way to help you secure the best rate is by improving your credit score.
Understand the fees involved in refinancing.
These fees include: an appraisal fee, origination fee, discount points, and mortgage and title insurance.
Calculate your new payment.
You’ll want to understand and analyze the new cost of the loan for both a 15-year and a 30-year loan. Check out our mortgage calculator, or speak with a mortgage professional, to understand what new loan terms would mean for you.
Compare your new and current payment, and total cost.
Looking at both the new calculated payment and your current mortgage payment, will help you see your costs, to determine if refinancing would help you save money.
By considering the total cost of fees, the length of your mortgage, and the new payment amount, you can decide if refinancing is right for you. Making the decision to refinance may be difficult. Here are a few quick tips to keep in mind as you consider refinancing.
- Improving your credit score can help you get the best rate possible.
- Unless you’re moving from a 30-year loan to a 15-year loan, you may just be resetting the clock on your current mortgage.
- Appraisal is key. If your home is appraised too low, you will have less cash available to you.
- Make sure you can afford the new payment. Check the interest rate, the new principal amount, terms, and insurance costs.
Remember, your situation is unique to you! Speak with a mortgage specialist for more information, or visit our Central Bank Mortgage Center to find out what other options are available to you.