Common Reasons and Tips for Mortgage Refinancing, Part 2

In part one of this two-part blog, we defined some of the basics of mortgage refinancing and why many homebuyers choose this option at some point during their home loan. Whether to capitalize on equity, change loan term or even alter interest rates, refinancing can have several distinct benefits for buyers in a few different situations.

At Altius Mortgage and our partners at Mortgage Ogden, our mortgage refinancing solutions are second to none. In today’s part two of our series, we’re going to take a look at several tips and themes you should be strongly considering if you’re thinking of mortgage refinancing.

Financial Goals

Refinancing a mortgage loan isn’t something that should be done on a whim – it should be carried out with a specific financial goal in mind, and within circumstances that allow for this goal to be met. The primary goal for most people refinancing is to lower monthly interest rates or overall payment amounts, so don’t simply jump at a refinancing option that doesn’t accomplish at least one of these goals for you.

If your goal is to capitalize on equity, on the other hand, be sure you’ve done the proper calculations and will receive the windfall you’re expecting in a way that won’t damage your future finances.

Lender Quality

One of the primary financial areas to consider during a refinancing process are any fees or costs that come along with refinancing, and the lender you choose plays a big role here. Ask about a few important factors, such as whether these fees and costs will be rolled into your mortgage or be required up front. You should also ensure that interest rates are expressed clearly – certain unscrupulous lenders may try to offer “no-closing-cost-loans” that, while they do indeed hold off on these costs, will actually raise your interest rate or add to your principal balance in the process.

Disclosing Assets and Liabilities

No matter which lender you choose, transparency with your assets and liabilities is a must. Collect any related documents or important pieces and ensure they’re organized as well as possible.

Credit Score and History

Credit score and credit history aren’t just important during an initial mortgage application – they’re also a big part of refinancing. Ahead of any refinancing attempt, ensure your score is in an adequate range and take some steps to improve it if not.

Appraisals

Finally, while appraisals are not always required for a mortgage refinance, they’re valuable tools to utilize. A third-party appraisal helps you figure out the current value of the home, and can also help determine how much money will be awarded to you during a cash-out refinance.

For more on some basic tips for refinancing your home, or to learn about any of our mortgage services, speak to the staff at Altius Mortgage today.

Common Reasons and Tips for Mortgage Refinancing, Part 1

For many buyers in a few different situations, refinancing a mortgage is a prudent move. The refinancing process, which involves replacing your existing mortgage with a new home loan, assists many with lowering their payments and interest rates or even changing their loan program – and can even help you build equity in your home in many cases.

At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to offer several home refinance options for those in need. What are some of the options out there in this realm, and why might you be in a position to consider them? This two-part blog will dig into these areas, plus look at a few basic advice areas we can provide you when it comes to making the right decisions and using the refinancing process properly.

Refinancing Options

As we noted above, mortgage refinancing is the process of replacing your existing mortgage loan with a new one, typically with more favorable terms in at least one area. You do not have to work with the same lender during a refinancing situation, and the process is generally quite a bit simpler to go through than the initial home mortgage application and assessment.

During mortgage refinancing, your old loan will be completely cleared from the books as you begin to make payments toward the new one. There are two broad categories of refinancing to consider:

  • Rate-and-term refinancing: During this type, you do not change the principal balance of the loan in any way. Rather, areas like interest rate and repayment timeline can be amended to make the loan more beneficial.
  • Cash-out refinancing: During these situations, your new principal balance will be higher than the old one – with you receiving the difference in the form of a lump sum cash payment. This cash can be used for a number of purposes, whether it’s paying down debt, remodeling the home or others.

Why Refinance?

Here are some of the primary reasons why many people choose to refinance their homes:

  • Lowering costs: Refinancing can help lower either monthly payments, interest rates, or both.
  • Term reduction: Refinancing can allow you to reduce your loan term through paying off the loan earlier.
  • Equity: Through a cash-out refinance, you can capitalize on some of the equity you’ve built in your home and put that additional cash to good use.
  • Rate change: Some homeowners want to switch from a more volatile adjustable rate to a fixed-rate mortgage, which refinancing allows. Fixed-rate mortgages are often the better option for those attempting several areas of long-term financial planning, as they allow for a firmer idea of what future housing expenses will look like.

For more on mortgage refinancing, or to learn about any of our mortgage loans or services, speak to the staff at Altius Mortgage today.