Today, it is more important than ever to make sound financial decisions with every aspect of one’s life. That includes staying up to date with all bill payments and performing annual financial audits on items such as land-line telephone service plans, cell phone service plans, cable TV contracts, credit card plans, and your residential mortgages. Of this list, the most essential audit you can perform is to your home mortgage. Even in economically hard times, lenders are often times offering record low refinancing rates to customers who are up to date on all bills and whose credit history is clean. With that said, it is in your best interest to keep abreast of the mortgage trends so you are ready to jump in the refinancing market if an opportunity presents itself.
Mortgage lenders are super cautious these days when lending money and it seems to be more difficult to qualify for a new mortgage or the refinancing of an existing mortgage. But, just because it is difficult does not mean it is impossible to meet lender’s criteria for a loan. A rule of thumb is you should not look to refinance your existing mortgage unless the current lending rates drop by at least one full interest point. Then and only then will it make financial sense to consider refinancing your loan. In addition, if you are only planning on remaining in your property for a short period of time, it may not be worth the fees collected by a lender when refinancing a loan. It will take you several years of monthly savings to recoup those fees, so that is why one must be planning on owning their residence for approximately five years or so.
The savings one can bank from refinancing with a lower mortgage interest rate can certainly accumulate over the life of a typical 30 year loan. In addition, many individuals will choose to refinance with cash out to increase their available cash flow. If one has some large bills pending….college tuitions, children’s wedding, purchase of a vacation home, large repairs or additions to your existing residential property, you may want to refinance in order to have the cash flow available to cover any of these expenses.
Several things to remember when refinancing in these economically challenging times are that home values are not necessarily where they were when a consumer originally purchased their home and signed their current mortgage lending note. Therefore, patrons may not be eligible to borrow as much money as thought because the equity they once had in their home may be gone. It is best to discuss this with you individual lending institutions. Regardless of the amount to which you are refinancing, or which lender you ultimately chose to refinance with, you will need to get all of your home and personal documents ready for the refinancing application process. These documents will include but are not limited to several years’ tax returns, proof of incomes, bank statements, listing of all credit cards and loans (to include outstanding balances), and current mortgage papers.
Once all of this documentation is gathered, the refinancing process will go much more smoothly. Lenders are definitely in the market to secure loans for the customers, but they just seem to be looking at the details a bit more closely these days. It never hurts to hire a real estate attorney in this process. Never the less, there are wonderful opportunities out there for consumers to increase their current cash flow by refinancing at record low rates. Make sure you do your homework and compare many lenders before signing on the dotted line. As always, remember to compare apples to apples when deciding which financial institution with which to refinance your home mortgage.
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