More than six million homes are sold in the United States every year. Statistics further revealed that 63 percent of homeowners opt to refinance their mortgage.
In general, when you refinance mortgage, it refers to the process of paying off a current loan and replacing it with a new one. More often than not, homeowners choose to refinance a mortgage not only to acquire a lower interest rate and abbreviate the period of their loan but also because of the following reasons:
- Save Money. Securing a lower interest rate will not only save you money, but it also uplifts the rate at which you build equity in your home. Plus, refinancing a mortgage also minimizes the size of your monthly payments.
As a general rule of thumb, choose companies like Entrust Funding who can reduce the interest rate by at least two percent. For the best results, consider how long you plan to stay in your property before deciding on an adjustable-rate or fixed-rate mortgage.
- Consolidate Debt. One of the primary benefits of mortgage refinancing is consolidating all of your debt into one single loan. This allows you to monitor loans or payments easily and save on interest payments.
Research has shown that consolidating debts can also bring hidden psychological benefits and minimize stress. Keep in mind that surveys by Harris Poll revealed that nearly a quarter of Americans are surprised, at least sometimes, by their credit bills.
- Change Your Loan Type. Having the ability to change your loan at any given moment can provide you with opportunities to cover significant expenses. Generally, experts suggest switching to a loan at a fixed rate if you have a variable-rate mortgage, especially when interest rates are falling.
Note that switching to fixed-rate loans will not only minimize interest rates, but it also removes concern over interest rate hikes in the future.
On the other hand, choosing an adjustable-rate mortgage will result in smaller mortgage payments. This also eliminates the need to refinance every time rates reach an all-time low.
Do I Need An Attorney To Refinance My Mortgage?
Refinancing is complicated, but most homeowners don't need the expertise of a real estate attorney to navigate the process. Usually, homeowners choose to refinance on their own to keep costs down to a minimum.
Ideally, look for financial brokers to guide you in the refinancing process. In most cases, these brokers will initially evaluate your mortgage before figuring out your interest rate and pre-payment penalty.
Subsequently, the broker will also determine your closeness to the maximum interest rates. Plus, they are also responsible for comparing mortgage terms to secure the best possible borrowing terms for your budget.
What Credit Score Do I Need To Refinance Mortgage?
Most lenders require a minimum credit score of 620 to approve a refinancing application. Ordinarily, the refinancing programs with the least FICO-sensitive requirements are insured by the Federal Housing Administration (FHA).
For a non-FHA mortgage or VA loans, individuals opting for a loan usually need to have a minimum credit score of 580. Some FHA-approved lenders like Entrust Funding set their minimum credit score lower to cater to a considerable portion of prospective homeowners.
Knowing the worth of your home before starting the process will provide you all the information to proceed.
Don't forget that most lenders require owners at least one year in the home before refinancing their mortgage. Determine your refinancing opportunities by giving Entrust Funding a call today.