Refinancing is when you get a new mortgage to replace your current one. The purpose is to obtain a better term or interest rate, and of course – to save money. If you have a high interest rate, use this guide to consider refinancing in the Redding real estate market.
How’s Your Credit Score?
Your credit score is perhaps the largest factor that will determine what rate you get on your new loan. Before you apply for refinancing, get a copy of your credit reports and make sure everything looks ready to roll.
How Much is Your Home Worth?
Your house will have to undergo an appraisal for the lender to know its worth. That number will help determine how much you can borrow. Check comparable sale prices (not just listing prices) in your neighborhood to see if your house is worth as much as you think it is.
Do You Have the Necessary Documents?
Organization is key here. You’ll likely need to provide proof of employment, income and assets. That could mean pay stubs, tax returns, bank statements and other documents. The more prepared you are, the faster the process.
Can You Pay More Now in Exchange For a Lower Rate?
Refinancing isn’t free. But, you will save money in the long term. If you plan to keep the loan for several years, think of refinancing like making an investment. You’ll need to cover the upfront costs so that in the long run you’ll make more off the Redding real estate market.
Should You Lengthen or Shorten Your Mortgage?
When you refinance your mortgage, you start the 30-year clock ticking again. If you don’t want to do that, consider a 10-year, 15-year or 20-year mortgage, if you qualify. Reducing the length of your mortgage can be an appealing option for homeowners seeking to pay off their house before retirement.
Should You Take Cash Out?
If you take cash out, to let’s say remodel your kitchen, it’s like paying for that remodeling job over the next 30 years. Or if you take cash out to pay your child’s college tuition, you put your home at risk if you don’t make the payments, which doesn’t happen if you take out an education loan. There are times when taking out cash makes sense (you can’t get that low of an interest rate elsewhere), but we want to make sure you’re making the wisest decision possible.
Which Lender Should You Use?
Lastly, you’ll need to decide which bank or lending agency to use. You’ll want to pick a company that’s personable to your situation, but also professional. Consider your options locally and choose an agency that knows the Redding real estate market.
The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.
* For loan examples and more information visit our disclosure page at https://www.uslendingcompany.com/disclosures/