There are several mortgage loan options available when buying a new home and one of these is home loan refi, Fort Worth, TX. But here’s the thing you need to think about when it comes to refinancing: though it offers a promising opportunity to better your finances, there are several drawbacks as well that you should be aware of.
In this post, we are sharing some important questions about home loan refi, Fort Worth, TX, which may help you make the most appropriate decision – on whether to go for it or not.
Why do I need equity in my home? In order for you to qualify for a new loan without paying private mortgage insurance (PMI), you should have at least 20 percent equity in your credit. Please note that your goal to refinance is to take advantage of lower interest rates. If you pay for the PMI, it defeats the purpose of refinancing to save some amount.
Is my credit score good enough? Credit scores are another factor that plays a big role in securing a good mortgage rate. As a matter of fact, you need a good credit score to qualify for any type of mortgage at all. Aim for a credit score that is 720 or higher. If not, you might need to work on improving your credit first before applying for a home loan refinancing.
Does my old mortgage have a prepayment penalty? Sometimes, mortgages come with penalties for paying off your loan early. Yes, it may seem unfair, but that is how the industry works. So, find out whether or not your old mortgage penalizes you for early repayment. The exact penalty will vary from one company to another, but the refinancing guide by the Federal Reserve Board states that the amount is usually between one to six months worth of interest payments. So, figure out the number and do what the number tells you.
There are more questions that should be asked and answered when doing mortgage refinancing and they are best referred to mortgage experts.
Consider HomePlus Mortgage if you need assistance for a home loan refi, Fort Worth, TX.
Contact us at (512) 949-3385.