Recently, with the change of various policies and economic conditions, the interest rate of housing loan has been continuously lowered, all the way down to
For those who happen to buy a house or plan to buy a house, this is undoubtedly a very good time. But in fact
For those who have already bought a house, refinance is also a good choice!
Refinance the loan
What is Refinance?
Housing loan refinance usually means to stop the current housing loan, with the current housing price to do a new loan
Replace an existing mortgage with a new one. In the process of refinancing, if the interest rate can be lower than the previous payment
The interest rate of the loan, can save money.
If the current loan rate is lower than the original loan rate, or if the credit score has improved enough to qualify for a lower loan
When the loan interest rate, you can consider Refinance the loan.
For example, after the outbreak of pneumonia this year, the interest rate of the loan has been reduced, for many friends who have bought a house
Now is a good time to do it.
When would you consider refinancing?
There are many factors that affect Refinance, such as the following:
New banks can offer better lending rates and pay less each month.
The cost of Refinance can be recovered within a reasonable time;
If you want to change the length of your loan, say, from 30 years to 15 years, you can do it faster
Pay off the loan with less total interest;
Taking cash out of the home equity, a process known as cash refinancing;
Conversion from ARMS adjustable-rate mortgages to FRMS fixed-rate mortgages
In addition, it is not necessary to consider refinance when the loan interest rate is lowered, only when the interest rate is lowered by at least half a percentage point,
And do not plan to move within a short time, the significance of refinance is greater, otherwise it is possible to finish refiance here
He who moves at once loses.
How do I Refinance?
The steps of Refinance are actually very similar to the steps of buying a house.
Step 1: Set clear financial goals.
Whether it’s because you want to make your payments shorter, you want to make your monthly payments smaller or whatever, if you’re refinancing
Money, we must consider clearly what is the purpose of refinancing first. For example, the first loan is 30 years, and the repayment has been 10 years
Then he Refinance the remaining 20 years for 30 years. It seems that the monthly repayment is reduced, but in fact the interest is reduced
There will be a lot more
Step 2: Check your credit score and credit history.
The steps to Refinance a loan are similar to the initial approval of the original home loan. The applicant
The higher your credit score, the better the loan rate your lender will give you, and the better your chances of getting a loan.
Note: Spending a few months improving a credit score before starting Refinance may lower an applicant’s score
The interest rate. Scores above 740 generally lead to the lowest interest rates.
Step 3: Determine home equity.
Home equity is equal to the value of the house minus what’s left on the loan, which means if you sell the house now, you pay it off
How much money can I still get on a loan? Here you need to view your current mortgage statement. However,
Search real estate agents’ websites or contact a real estate agent directly to find the current estimated value of a home. housing
Net value is the difference between the two. For example, if you still owe $250,000 on the loan and the home is worth $320, 000
$, the home equity is $75,000.
Step 4: Find more lenders.
In general, it is necessary to compare several lenders before making a loan, because each of them may not offer the same price
The same. After choosing a lender, be sure to ask when you can lock in the lowest interest rate without worrying about the loan closing
Before interest rates go up.
Note: In addition to comparing interest rates, also pay attention to the Closing Cost and whether the fee is prepaid or not
It counts towards the new mortgage. Lenders sometimes offer “no-closure-cost loans” to credit the closing fee
Loan amount, but charge a higher interest rate.
Step 5: Collect the most recent financial summary.
Collect the most recent payroll, tax returns, bank statements and any other financial information requested by the lender
Documents. The lender will also be looking at your credit, so it’s best to check assets and liabilities ahead of time.
Note: Document this information before you start Refinance to make the loan process go more smoothly
Step 6: Prepare for a home reappraisal.
Some lenders may need to reassess to determine the current market value of a home in order to approve Refinance.
Note: There are often several hundred dollars to pay for an assessment. If improvements or repairs have been made since the purchase,
It could lead to higher appraisals. Newer homes might save the money.
Step 7: Pay in cash if necessary.
The Final loan summary (Final CD) will list how much you need to pay out of pocket to complete the loan. Most of the time
The lender will suggest that you include Refinance fees in the new loan.
Step 8: Check your loans frequently.
Be sure to store a copy of the Loan Summary (Final CD) ina secure location and set up automatic payments to ensure each
Monthly payments are made on time. Many lenders will offer lower interest rates if they set up automatic payments.
Note: Your lender may resell the loan on the secondary market immediately after the closing of the transaction or years later. this
Means that you will owe a mortgage to another company, so be on the lookout for emails or letters notifying you of such changes
For example, Xiaobian housing loan is not originally applied for a loan of the lender.
The advantages and risks of Refinance
The benefits of Refinance
There are many benefits of Refinance, such as the following:
Reduce your monthly expenses. When Refinance the monthly mortgage replaced by a new loan with a lower interest rate, this means
Your monthly payment to the lender will be reduced.
Pay off your mortgage faster. You may choose to Refinance at a lower interest rate and for a shorter term. For example,
If you can regroup from a 30 year mortgage to a 15 year mortgage, you can save a lot of interest.
Eliminate private mortgage insurance (PMI).
Draw cash out of the equity in your home. If you are in need of a sum of money to invest or pay off a high-interest debt, this is the place to start
A great opportunity.
Locking in a fixed-rate mortgage. If you now have an ARM adjustable payment rate mortgage, and you think
Interest rates will rise and you can convert it into a fixed-rate loan FRMS. Your new rate may be higher than what you are paying now
Yes, but you can guarantee that it won’t increase in the future.
Risks and costs of Refinance
While Refinance seems like a very economical operation, it’s not for everyone. Before you begin, please
Just keep the following points in mind:
Refinance is not free. As with the original mortgage, Refinance comes with attached fees, such as a start-up fee
, appraisal fees, title insurance, land taxes and other fees. Even if the reorganization results in a reduction in your monthly payments, you don’t actually
You’ll save money right away. The gains won’t be immediately apparent until the monthly savings offset the Refinance expenses
So applicants need to do some calculations about how many months it will take to reach that equilibrium point. Here if possible
Before moving, then Refinance may not be the best choice.
An upfront penalty may be required. Some lenders will charge you extra fees for paying off your loan early
Total borrowing costs are likely to increase.
How to get the best interest rate
If you’ve decided to Refinance, you can start choosing lenders. It is recommended to apply at least
Get quotes from three lenders, find quotes and comparisons on many websites, etc.