How To Refinance Your Mortgage Wisely!

How To Refinance Your Mortgage Wisely!

By: Elise Gray - Posted in:
Forms for mortgage refinancing with a small house and a pen on top

Wondering how you’ll refinance your mortgage? We have some answers here for you at WealthHunters. It’s easy to get lost in the world of refinancing, especially when you’re considering how tedious it was to get a mortgage in the first place. That’s why WealthHunters is here to tell you not to worry. We have a wealth of information for you including the ins and outs of refinancing, rates, and when you should refinance!

How Mortgage Refinancing Works

Mortgage refinancing is simply moving your debt to another creditor with a friendlier interest rate and/or loan term.

How Mortgage Refinancing Works
Bank calculates the home loan rate

When the age-old question, “Should I refinance my mortgage?” comes up, have no fear. Getting what we call a replacement mortgage, or refinancing, is easier than you think. People often refinance to get out of steep interest rates and terms. Just like when you refinance an auto loan, the first home loan will be paid off in full by your new creditor. You will then begin making payments to your new creditor at a friendlier interest rate! Why should you do this? Refinancing can be a healthy way to rearrange some of your debt, especially if you’re trying to budget.

Mortgage Refinance Rates

If you have great credit, you’ll find that refinancing your mortgage is very helpful. Refinancing is a way to convert your rate into something more affordable. However, if you have less-than-perfect credit, you may find that the odds and rates are not in your favor. However, you can always fix your credit yourself or hire a credit repair company.

Like in The Great Recession, you may find that economic climates are tailored to mortgage rates and prices. If you’re battling large mortgage rates and an unruly economy, then making your monthly payment can be difficult. Some people do find themselves looking to refinance when this happens. However, it may not be better refinance in a negative climate, as you could increase your interest rate instead of lowering it – and isn’t that the opposite of the point? Below are some mortgage and refinance rates from trusted lenders, so that you can get an idea: Bank of America (mortgage) 15-year Fixed Rate 4.000% Chase Refinance (mortgage) 15-year Fixed Rate – 4.000% Citi Bank (refinance) 30-year Fixed Rate 4.75%%

When to Refinance Mortgage Loans

It’s best to refinance when your credit is in great shape, and your debt-to-income ratio is low, meaning you have little-to-no debt. If you do not have a second mortgage and your credit score is high, you’ll probably be pretty pleased with the rate you receive. Here are key things to pay attention to when you’re thinking about refinancing:

1. What’s your goal? Make sure you’re doing this for the right financial reasons.

2. Know and own your credit score, or it will own you.

3. Assess your home’s value.

4. Research! Shop different lenders and get the best rate for your score.

5. Factor in all of the costs.

6. Finalize the paperwork.

7. Lock into your rate.

8. Enjoy your new rate and terms.

What is a Fixed Loan?

A fixed loan rate is when the rate remains the same throughout the life of the loan, much like a personal loan would. If one has an adjusted rate, then the interest can “float” or change as the terms do. You’ll get to explore these options when you apply for a mortgage.

When not to Refinance Mortgage Loans

If you’re thinking about refinancing, check the rates! One of the main reasons some people do not refinance is because of the rates. There’s a general rule of thumb to consider in personal finance 101: Either reduce your rate by at least 2% or not at all. Most lenders boast saving upwards of 1%, so there are plenty of reasons to refinance your mortgage.

For more information on refinancing like a pro, auto loans, or consolidating credit card debt, check out our articles. We are packed with helpful financial guides.

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