Mortgage interest rates have been at all-time lows recently, which has generated an interest in refinancing mortgages. After all, this is an opportune time to find better rates and save more money in the long run!
The refinancing process is all about timing, so you want to make sure you get the best rates available. Making mistakes with mortgage refinancing can be extremely costly and put you in an even more expensive loan, so you have to make sure your new mortgage is really worth the move.
4 Mortgage Refinancing Tips
Here are four tips to keep in mind for refinancing your mortgage:
- Refinance at the Right Time. Even though interest rates may be low enough to tempt you to refinance, you’ll have to determine whether or not you can afford it. Low-interest rates don’t always mean it’s the right time for you to refinance, so analyze the interest rates and your own finances. If there’s more than a half percentage point difference between the current interest rate and the rate you were given, that’s a good sign to refinance. However, if your credit score has decreased since you first got your mortgage, you might not be in the right financial position to get a new one. Additionally, if you don’t have enough money to cover closing costs, then consider refinancing when you fulfill this requirement.
- Shop Around for Better Rates. You may be tempted to stick to your current lender for refinancing. However, this could cause you to miss out on seriously competitive rates from other lenders. Be sure to shop around for better rates from other lenders, because this could end up saving you thousands of dollars. You might even get better deals when you explore what other lenders have to offer. Getting quotes from at least three different lenders is a good way to compare rates to make sure you get the best one. You’ll have plenty of choices that are certain to provide you with the most suitable rate.
- Give Each Lender the Same Information. This is an especially important tip to keep in mind because many people tend to forget this. In order to properly refinance your mortgage, you’ll have to give each lender you talk to the same information, so you get comparable loan estimates. Providing them with the exact same details about your financial position will give you access to loan products that you can set side by side to see which one is best for you. If you vary the information you give each potential lender, then these estimates are going to vary just as much. This will also make it more difficult for you to calculate which fees and interest rates are most beneficial for your current situation.
- Focus on the Interest Rate. Lastly, although it may be tempting to zero in solely on that attractively low-interest rate, it’s actually much better to focus on the annual percentage rate (APR). The interest rate is the amount the lender will charge you for borrowing the money to finance your home. Meanwhile, the APR supplies you with a more complete image of how much the loan will cost, as it factors in the interest rate plus the fees charged by the lender to close the loan. Paying attention to the APR will help you make a much more informed decision about whether you’re ready to refinance your mortgage. Don’t be swayed by the low-interest rate—it’s only part of the picture!
Mortgage Refinancing with Shannon Christenot
Many homeowners have made the mistake of falling into the trap of refinancing their mortgage during low-interest rates without fully understanding other important factors. Sometimes these new mortgages end up being extremely costly because they were taken without homeowners being fully prepared for it. With these four tips, you’ll be making sure you’re fit for refinancing without breaking the bank!
Looking for the best mortgage company in Los Angeles? You’re in luck with Shannon Christenot. With more than 20 years of experience in the mortgage industry, we know the ins and outs of the LA housing market. We also offer aggressive rates and cost-saving programs that will bring you one step closer to your dream home. Call us now at (818) 601-2231 to see how we can help you find the best mortgage!