How To Refinance Like a Pro

How To Refinance Like a Pro

By: Elise Gray - Posted in:
Man doing his own home mortgage accounting

When you want to refinance like a pro, there are a few key things to consider. The first step of refinancing is understanding that it might be a good option. Not everyone should or can refinance their loan.

If you decide you want to refinance a loan, you’ll want to get a 10-day payoff of the amount owed. You can usually find this online, or you can call your creditor directly. Your new lender will take the payoff amount and issue a check or electronic payment, to pay off the original amount. They will write up a new loan amortization schedule and documents for you to sign. You’ll sign the paperwork and begin paying your new loan payment at a better rate!

You might be a good candidate for refinancing if you applied for a sub-prime loan long ago with a less-than-perfect credit score and got a high-interest rate.

What is Refinancing?

Refinancing would be the step one would want to take when they’ve decided they qualify for a better interest rate on a loan they already have. Sometimes you can refinance a loan with the original lender, sometimes not.

WealthHunters’ Refinancing Definition

Moving your debt from one interest rate to another.

Why Refinance a Loan?

Refinancing makes all the difference with auto loans especially, because you could be paying significantly less for a loan than you are. Refinancing a loan can lower not only the balance on your loan but also your monthly payment. You can refinance auto and personal loans. People generally choose to refinance in hopes of paying off loans faster. Refinancing can be a better option than a debt settlement, so it’s wise to see if you are eligible.

Different Refinance Deals To Consider

Sometimes different lenders will send you refinancing opportunities with respective rates. We advise that you always read the disclosure, which will often explain that you must be within a certain credit score to qualify. If you finance with a dealership, sometimes their finance teams will send out letters when you’re eligible for a financing opportunity. It’s always worth the opportunity to research. Check your credit score with free sites like Credit Karma, so you can keep track of your debt.

How to Refinance a Credit Card

I could go on all day about refinancing options, but it’s useless if you don’t know what you can refinance. If you’re looking to refinance a credit card, there are a few key things you’ll want to pay attention to. The first thing you’re going to want to look at is your rate and the personal loan rates available to you. You also need to have an understanding of your credit score. Is it good? Bad? Predatory credit card rates are what keep people in the dark. However, you can easily stumble right back into the pit of debt-filled doom if you’re not doing your refinancing research. There are plenty of pay-day cash loan places offering personal loans that claim to get you out of debt.

However, their entire goal is to keep you in it; this is why it’s so important that you understand the refinancing definition. If you’re planning on paying off your credit cards with a personal loan, find one that will accept your current score. Then tally up the payoff amounts of your credit cards and apply for that amount. If approved, take the funds the personal loan lends you, and pay them all off. Then you’ll be paying off the same amount of debt with one interest rate and one minor payment every month. Refinancing really can be this simple.

How to Refinance an Auto Loan

This refinancing tactic only sounds tricky –– it’s not. Plenty of people end up upside-down on their auto loans when they go to refinance them, and it sucks. The only way to avoid this dilemma to make sure you’re doing your NADA homework at the beginning of the loan. Do haggle. Do research. Don’t accept insane auto loan rates, otherwise, you’ll end up here.

If you missed the memo, it’s not a huge problem. You can refinance your auto loan; it’ll just take some research. Start by calling your lender and asking for a 10-day payoff amount. You want this because you need time to get title work and checks processed. Interest accrues by the day, so it’s important to account for that when you’re refinancing an auto loan. The next thing you want to do is apply for a new loan. The new loan should be the total of your old loan’s 10-day pay off amount, plus any title work fees (ask the lender about this).

Additional Auto Loan Refinancing Options

When refinancing your car, you can either apply with the same lender (which we would only recommend if it’s a credit union) or a different one. If it’s a new lender and they approve your loan, they’re going to ask for the title, pay off amount, and your pink slip. The slip came with all of your lending paperwork when you bought the vehicle. Here’s where it gets tricky. If you owe more than the car is worth, they’ll either ask you to pay the difference or they’ll get you a personal loan to cover it.

If you’re paying $650 a month for a car that only costs $300, it might still be worth it to go that route. Sit down with a loan officer and do some number crunching. Even if you go from a $650 loan payment to a $450 one, you’ll still be paying less interest and that’s the ultimate goal. Just remember that when you’re refinancing, the goal is to pay less, not more. If you’re paying more, then you didn’t refinance your loan correctly.

Questions to Ask When Refinancing

Are you looking into refinancing? If so, then there are some key questions you should consider as you look for new options:

  • Am I eligible? Look at your credit score and see if you fall into a category that would qualify for a better rate. The last thing you want to do is run your credit and not qualify, which will knock your score down.
  • Are the terms reasonable? Make sure you’re looking at the amortization schedule to ensure you’re getting a better deal. Some offers might pose a lower payment, but with a higher interest rate – which isn’t better.
  • Do I have options? Research different options so you can see what deals work for you. You might find that there’s an amazing new loan opportunity available to lenders in your credit range.

Take Your Time

Just like anything finance-related, refinancing is a quite the process. Be patient as you sift through your credit score, pay off amount, and different options. Don’t settle for the first thing that looks good. Research different options from different lenders and make sure you’re getting the best rate for your credit score. Don’t forget to reach out if you have any questions or check out our Debt 101 sources.

Remember –– Anyone Can Refinance Like a Pro

If you want to refinance like a pro, all you need is patience and understanding. Do not be hard on yourself. Learning about refinancing tactics can be tricky. Just remember that the key to refinancing is balance. Find a balance between your current bills and other commitments and keep it reasonable. If a loan seems to good to be true, it probably is!

Avoid rates that appear outlandish and make sure that you research your current rate. Refinancing is for the debt-savvy. Don’t be a victim in the refinancing world, be a pioneer! Refinancing is for everyone, so long as they understand how to refinance. You can refinance any loan, credit card, or mortgage. Just know when to refinance, and you’ll be just fine. Remember to contact our team if you have any questions or need additional information. We can help you do more than refinance!

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