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Refinancing your home

Posted on December 3, 2015 by Ray Williams.

Right now there are a lot of advertisements about refinancing your home and most are for good reason and usually geared around the Holidays.  Now is the time when most of us our looking to free up some funds so we can have a little extra in our pockets to have for the Holidays.  This is why lenders will choose to advertise about refinancing and it will continue just after the holidays because even if we didn’t free up funds, we may want to look into ways to help payoff our recent increase in debt from the Holidays.

The main thing to consider when refinancing is making sure it makes sense for you. Taking into consideration the goal and purpose of refinancing then looking into the benefit and making sure it outweighs the cost.  Even with the ads stating a “no cost refi” there is still a cost, remember you can’t get something for nothing. And if it sounds too good to be true, it usually is. You just want to make sure you are working with an experienced, qualified, trustworthy and knowledgeable lender who is looking out for you. The fortunate part is that recently we all know the market has improved so for those of us who have purchased in the last 6 years will have seen an increased market value of our property, even those whom have purchased in the last 6 months!  Rates are still low and with the increased values it equates to an opportunity in leveraging our equity and refinancing in order to save money.

One thing to consider before refinancing is making sure your credit is in a good position. Having a lower FICO score can limit your loan options and could also cost you more (higher rates). Sometimes this may be unavoidable and refinancing may be a more immediate necessity and you may be unable to improve your FICO prior to refinancing, which is ok, you will just need to keep in mind that there is still a minimum FICO score requirement to qualify.

Here are a few good reasons to consider a refinance;

  • Removing your mortgage insurance
  • Lowering your interest rate
  • Lowering your term
  • Consolidating a 1st & 2nd mortgage
  • Cash-out- this can be used to consolidate debt, home improvements (may also consider doing an FHA203k or Conventional renovation loan), college tuition, etc.

Again, refinancing may not make sense for you right now and is different for each person so the best way to find out if you should refinance is to call your lender for a mortgage review/analysis.

If you have any questions or would like to discuss further please contact us.

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