Four Things To Do Before Attempting To Refinance Your Home
by Albane Francois
Are you considering refinancing your home? If you're behind on your payments or simply find that your payments are difficult to meet, a home refinancing company can help you lower your monthly debt. Refinancing often extends the term of your loan but it can also yield very favorable financial results for those who are currently in debt. Here are a few things that you should do before you begin the process.
1. Fix Up Your Credit
Just like your original mortgage, your refinancing terms and rates are going to be based on your credit score. If your credit score has gone down rather than up in the interim following your initial mortgage, you may not want to refinance. You can improve your credit score by paying down debt, avoiding new debt, and correcting any errors or issues that are currently on your credit statement.
2. Check Your Equity
In order to refinance your mortgage, you have to have equity in your home. Usually you need at least 10%. This can be difficult for some homeowners who purchased a house that they are now "underwater" in -- they owe more money than the house is worth. If you find yourself underwater, you may want to consider an updated appraisal. You could find that your home has increased in value since you purchased it.
3. Calculate the Costs
A refinancing does cost money -- it usually costs about the same amount as getting a mortgage does. For that reason alone, it's usually best not to refinance a mortgage that you've obtained within the last five years unless you truly need to. In general the cost of refinancing will usually be anywhere from three to five percent. Additional fees may apply if you are paying down less than 20% and thus require private mortgage insurance.
4. Take a Look At Your Taxes
Don't forget that you may have some substantial tax credits going away once your mortgage amount is lowered; your property taxes, for instance, are tax-deductible. You should run the numbers before you actually refinance your home to determine whether you're truly saving money.
Refinancing doesn't just save you money on your mortgage. Refinancing can also be the only way that you can get someone else off of a loan if they no longer want to be on it. For more information about home refinancing services, you can find a go to website or contact your local lender.
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About Me
How many times have you put off making repairs around your home because you didn't have the money to make them immediately? Have those decisions caused even more repair bills because you waited to make the repairs? I have done this several times in the past, and, oftentimes, not making those repairs have cost me far more to complete because the damage spread. The whole reason I created my blog was to help others find the financing they need to make home repairs without worrying about choosing the wrong type of financing option. Hopefully, my hard-learned lessons will help you avoid the same struggles that I have undergone.