After owning a home for many years, refinancing your mortgage may seem more and more appealing. Not only does this give you the chance to lower your interest rate, it could shorten your mortgage all together. Refinancing doesn't have to be stressful, either, if you plan in the following ways.
Act Now
Since this is such a large financial decision to make, especially if you have a family, you may want to take your time with your refinancing options. Taking too long, though, could be detrimental as interest rates will only rise the more you delay.
If you're thinking about refinancing, act as soon as you can. Not only does this lock you in a good interest rate, it helps you avoid long wait times. After all, refinancing applications tend to stack up throughout the year. You wouldn't want your application just sitting there as rates move past your comfort zone.
Check and Improve Your Credit
A huge determinant for the interest rate you pay when refinancing is your credit score. So that you're not completely shocked by your rate, you'll want to check this in advance. You can do so online from the comforts of home for free.
If your credit score is not where it needs to be in terms of qualifying for lower interest rates, you're not out of luck. You could, for instance, start paying off outstanding balances on your credit card. Then, you can establish a good financial track record. It's also important to continue paying your bills on time. Also consider opening new lines of credit, and paying off small purchases to quickly boost your score.
Consider an Adjustable-Rate Mortgage
When purchasing your home originally, you may have went with a fixed-rate mortgage. The interest rate may have been perfect, and you wanted to keep it that way. However, in order to lower your rate today, it may be best to switch over to an adjustable rate when refinancing.
This rate is often cheaper than fixed rates, since lenders know the risk you take. Generally, they are preferred if you don't plan on living in your home long-term. Just make sure you know that after several years, the rate could go up or down depending on market conditions.
Every homeowner deserves a mortgage that they can afford each month. This dream is possible for you and your family if you refinance your home the right way. Contact a company like Mortgage Edge for more information.
