How To Leverage Low Mortgage Rates To Refinance Your Home
As mortgage rates tumble, you may be contemplating a refinance. Mortgage rate drops haven’t been this low since 2016 and may indicate that now is a great time to refinance your current home loan. The decision to refinance your mortgage is not only based on taking advantage of low refinance mortgage rates, but should also take into consideration your current lifestyle and financial goals.
A refinanced mortgage loan can help you change your rate or your loan term. A cash-out refinance could help you tap into your home’s equity for a major purchase such a medical expense, college tuition or a wedding.
Refinancing Your Home May Be Right For You
Refinancing your home is smart decision while current mortgage rates for refinancing are so attractive. Analysis from data and analytics firm Black Knight found that “8.2 million homeowners could now qualify for a refinance and save at least 75 basis points — or around $268 per month.”
In order to refinance with low mortgage rates, homeowners must meet certain criteria including the ability to pay the costs associated with a refinance such as application fees, insurance, attorney and closing costs. You must also be a qualified borrower with good credit, 20% home equity (typically) and a sufficient salary.
Once you have determined that you are in a good position to refinance, there are a number of reasons that support the benefits of altering your rate or term which could help you achieve your personal and financial goals, including:
Decreased monthly payments
Increased monthly cash flow
Accessing funds through home equity
Reducing length of existing loan terms
Switching adjustable-rate mortgage (ARM) to fixed-rate mortgage
Calculate Your Refinance Rate
A refinance mortgage rates calculator can help you assess how much you will save as rates can vary depending on a variety of factors for homeowners. To calculate monthly and yearly savings and compare current payments with what a refinance could offer, homebuyers can use the Mutual of Omaha Loan Payment Calculator.
Taking The Right Steps To Refinancing
Once you’ve made the decision to leverage low mortgage rates to refinance your home, there are steps necessary to begin the process:
Make sure your documentation is in order, including pay stubs, tax returns, credit review, outstanding debts, and statement of assets.
Check your home equity and determine your home’s value — depending on the lender a formal appraisal may be necessary at some point in the refinance process.
Shop around for the right lender — choosing the right lender can impact the rate you settle on and the fees you will pay.
Have the necessary cash at closing.