Refinancing A Mortgage: Should You Or Should You Not Refinance A Mortgage ?
‘Refinancing a mortgage’ is a very popular term or practice amongst home buyers. When you get a new mortgage to replace the original one, it is called refinancing a mortgage.
Most people refinance a mortgage in order to borrow or obtain a better interest term or rate. You opt to refinance a mortgage on an existing loan to cut back on the interest rates and to find time to pay the mortgage amount.
Refinancing is a good option for borrowers who have a ‘perfect’ credit history. Through refinancing, you can change a variable loan rate to a fixed one and also obtain a lower rate (interest rate) for it. However, borrowers who have bad credit or less than perfect credit or have too much debt, refinancing can become a tricky business.
Refinancing essentially means to take on more on a mortgage if you are failing to pay or cope up with the first one. You may feel the need to refinance especially when the interest rates are higher or when you lose a job in the processor are in a bad position to do so, financially.
Benefits Of Refinancing
There are many reasons why you should refinance.
One reason why you should refinance is to reduce the interest rate. For instance, you have initially mortgaged a loan and you are able to pay the monthly mortgage payments.
Moreover, you might also want to refinance a loan when the interest rate becomes difficult to pay or when you lose a job or come in a difficult circumstance that you are nearing bankruptcy. That is when you choose to refinance a mortgage instead.
Refinance is a safer option than filing for bankruptcy because time changes and you might never know when you find the means to work hard for your mortgage and pay for the mortgage payments than declaring bankruptcy.
Furthermore, the reason why you should refinance a loan is that you can pay it off and reuse it when you need it. Refinance also gives you clarity for there are fixed monthly payments of it, so you know what you are paying and there is a categorical method of doing so. This is also especially true if you have a mortgage that is on an adjustable-rate compared to a fixed rate through a refinance.
Refinance is the solution to an answer when you are unable to pay for a mortgage.
Having established that, there are certain important conditions that have to be kept in mind while refinancing a mortgage. These include:
Qualifying For A Refinance Loan
It takes time and effort to refinance a loan. Moreover, there is certain criterion that has to be fulfilled in order to refinance a loan. This includes:
Your Credit History And Score
One of the first things that matter in refinancing a mortgage is your credit history. You will only be able to refinance a loan if you have a good background history and a good score. Furthermore, refinancing also depends on your payment history and the existing loan as well. It matters as to how much money you have paid on the existing loan and the total amount of payments you have made.
Income And Employment History
What also matters is your income and employment history. You should have a decent, well-established income to acquire a loan. You should also have a proper employment history. People who are on proper jobs, with permanent jobs or longer-term jobs are the ones who fulfill the criterion of getting a loan and vice versa.
Your Current Home Value And Other Debt Obligations
Finally, another important consideration when refinancing a loan is your current home value. The home you acquired initially on a loan should be worth a set minimum and you must also have no or lesser or fewer debt obligations to qualify for a refinance.
Getting a mortgage itself is a very tricky business so refinancing one is trickier. If you want to go for one, make sure you fulfill the criteria above.
Finally, if you are looking to refinance a mortgage, here are 4 top mortgages refinance lenders you should look for and at:
‘Better’ offers conventional, jumbo and FHA refinance loans. The minimum credit score you need for these conventional loans is 620.
Bank of America
Bank of America provides conventional, jumbo, FHA, and VA refinance loans.
Quicken loans provide conventionally, jumbo, FHA, VA, and USDA refinance loans. The minimum credit score you need to have for conventional loans is 620.
Veterans United Home Loans
Veteran United Home Loans provide VA streamline and VA cash-out refinance loan types. The minimum credit score for VA loan refinancing is 660.
Lastly, when looking for a mortgage refinance lender, go for the type of loans they offer, the closing costs, a cash-out option, and their customer services as well. The best customer support and staff will be needed to help you get through your mortgage years easily and effectively.