Top 10 refinance tips for homeowners

If you are thinking of refinancing your home, you need to know what you’re in for. Our guide gives you a better idea.

Are you thinking of refinancing your home? If you are, then it’s essential you have the facts behind you. You don’t want to make the same mistakes as people before you have, so keep reading down below to find out more.

Check Your Credit Report

First, you want to know your credit score, and check your credit report to make sure there are no errors on there. The last thing that you want is to be turned down or to face a higher mortgage because of an error on the report. Go through and double check before you even think about the process. 

Understand The Process

The process is pretty similar to getting your first mortgage. It’s not that much different, you just need to be aware that your old mortgage is going to be paid off with your new one. You should make sure that you speak to your solicitor about the technical ins and outs of this though, as they will be able to go through it in detail.

Wait To Refinance

If you aren’t in a rush to do this, wait until you actually need to. This gives you some time to make a few more monthly payments. The more you can get through before you refinance, the better you are going to be able to get in terms of your interest rate. If you don’t think that the house is going to lose any value in the next couple of months, then waiting is the right thing to do.

Understand Other People’s Mistakes

You should always look at past mistakes that have been made by homeowners when refinancing. Doing this will help ensure that you don’t make them yourself. For example, some people refinanced at the wrong time as they didn’t do enough research, ending up with a larger interest rate. This is easy to avoid, and just requires you to look around a little more before you decide on a policy.

Make Your Payments On Time

The better your credit score is, the more likely you are going to be accepted for this. Making monthly payments helps increase your credit score, and making them on time is even better. Do your best to ensure that your payments are always on time and this will be reflected to the mortgage lender when the time comes. If they believe you to be reliable, they will be more inclined to give you what you want.

Lower Monthly Debt Payments

You either need to pay off a debt completely, or find a way to lower your minimum payment on a debt you are currently paying. The former is the preferred choice as it gets you out quicker, but it’s not always the most practical choice. If you can manage to lower your monthly debt payments, this will put you in a better position with the lender that you are looking at. For example, if you have a few hundred left on one of your credit cards and you can afford to get rid of this completely, that’s the best case scenario for you.

Look For The Best Interest Rates

Don’t refinance your home until you have found the best interest rates. The first lender you look at is probably not offering you the best, so you need to look around a little. Try to find someone who is willing to do it at a smaller rate so that you get the best possible deal.

Look For The Lowest Fees

The same is true for fees. You don’t want to pay an arm and a leg to refinance your house, so don’t settle for massively high fees. Look around, find the average, and see if there is anyone offering below this. If not, choose the company with the best service. 

If You Can Increase Your Income

It might seem like an obvious answer, but if you can increase your income, it’s a good idea. Lenders are going to look at your debt-to-income ratio to decide whether or not they want to lend to you, and the more money you have, the better off you are going to be here.

Understand The Pros And Cons

You must do what’s best for you, which is why you need to understand the pros and cons before you sign anything. Ensure that this is the right financial move for you, knowing that it’s going to take longer to pay off and you have to pay more for this. But, you may be able to get a better interest rate and lower monthly payments. 

We hope that you have found this article helpful, and now understand the top 10 refinance tips for homeowners that you need to know. It’s important that you have all the information behind you before you refinance, and now you do!