There are many reasons why you might wish to refinance your mortgage. Perhaps credit ratings are at an all-time low and you want to take advantage of the favorable climate. Probably, it could be that you need some ready funds to cover repairs or pay off debts and need a cash-out refinance. Whatever your motivation, refinancing can be a great option in both the short and long terms.
But while many people contemplate the idea of searching for a new deal, lots of them are put off by the (perceived or real) obstacles in doing so. Although mortgages can be a tricky subject to get your head around. They needn’t represent such an arduous ordeal if approached from the right angle. Here are a handful of tips to ensure you get the best deal when it comes time to refinance your mortgage.
Search around for Refinancing Your Mortgage
It should go without saying, but not all mortgage providers offer the same terms on their products and some are catered more towards certain individuals than others. By doing your due diligence and taking the time to compare the best mortgage rates available to you, you can ensure that you get the biggest bang for your buck. Incredibly, a significant proportion of people simply settle on the first lender they come across. Don’t let that be you.
Optimize your credit score
Lenders will take into account a number of factors when deciding how much to offer you and at what rates, but your credit score is one of the biggest items on their list. Fortunately, there are a number of simple ways in which you can boost your credit score, such as asking for a higher limit on your credit cards to reduce your debt ratio, paying off all credit in full and on time and fixing any clerical errors on your report. This all adds up to a better mortgage for you.
Understand the fees
Although refinancing your mortgage doesn’t normally entail as many fees as the initial mortgage application, you should still be mindful that there are likely to be some unforeseen costs and squirrel away savings to cover them. Closing fees, appraisals, inspections, surveys and title searches are all standard practice when it comes to remortgaging (though not all of them will necessarily be applicable in your case), so set aside money to cover their costs.
Highlight home improvements
Speaking of appraisals, you should take care to point out any renovations or improvements you have made to your home in the time you have been living in it. While things like solar panels and extensions are obvious enough, other, more subtle differences might escape the attention of the appraiser. Don’t be shy in pointing them out, since any additional value to your home will only strengthen your hand and increase your bargaining (and borrowing) power.
Keep an eye on the climate
At the end of 2021, mortgage rates were staying stable at their lowest rate in years. As a result, many people took advantage of the lull to refinance their homes during the last year, which looks to have been a smart bet. Make sure you don’t miss out on similar opportunities to make your money work for you by staying up to date on the latest trends and developments in the market, so that you’re ready to strike when the opportunity of a good deal presents itself.
Refinancing your mortgage can seem like an overwhelming challenge, but taking a little time to research your options and following the advice above should make the whole process a lot simpler.