In 2020, interest rates hit historic lows and many homeowners sought out ways to refinance their mortgages in an effort to lock in those low rates and save money. Unfortunately, many failed to do enough research for the most competitive refinancing rates, leading them to spend thousands more than necessary.
The ideal refinancing rates are those that are 1% lower than your current mortgage rate. While this may not seem like much, lowering your loan by even 2% could result in substantial savings over the course of your loan.
Finding the most competitive mortgage refinance rates requires comparison shopping among multiple lenders. Lenders will take into account your credit score and how much equity in your home you have, among other factors.
To apply for a mortgage refinance, you’ll need to provide supporting financial documentation such as your existing mortgage term and rate, current home equity, recent pay stubs and social security number. You can also use a mortgage refinance calculator to find the most advantageous rate available in your situation.
It is essential to be aware of all costs associated with refinancing, such as lender fees and closing costs. These fees can range anywhere from several thousand dollars up to tens of thousands, and they’ll have an impact on how much money you save over the life of your mortgage.
If you plan to stay in your house for an extended period, refinancing may make sense. In this instance, the savings from a lower refinance rate will outweigh any upfront costs.
If you plan to sell your house quickly, refinancing may not be the best option. Consult with a real estate agent or home appraiser to find out how your property will be valued before making any decisions.
Finding the ideal mortgage is essential for reaching your objectives. To assist you, we’ve compiled a list of various loan types so you can decide which one best meets your requirements.
Cash-out refinancing: This type of mortgage refinancing allows you to access the equity in your home for debt consolidation or major purchases. Be wary: Some mortgage lenders only permit you to draw out 80-90% of its value, limiting how much money is available in total.
If you want to take out more cash when refinancing, a larger down payment is necessary. Most lenders require at least 20% as a down payment; however, if your credit score is high enough, then you may opt for less if necessary.
Refinancing your home can be a great way to pay off high-interest debt and significantly reduce monthly payments, but it may not be suitable for everyone.
Finding the ideal refinancing rate that fits within your budget can be tricky. Bankrate’s refinance break-even tool, for instance, provides a helpful calculator that will let you know how much money you could save by refinancing your home.
