Like the other mortgage options available, going for a home loan refinance in Phoenix, AZ, means getting through some hurdles to get the best deal. Navigating the home refinancing industry can be complex, and a person new to the market will likely find it overwhelming, if not confusing. But with the guidance of a mortgage professional, things will get a lot easier. Additionally, educating yourself before your application can go a long way.
Take the following into account to become a better-informed mortgage refinance client:
Debt-to-income ratio. Usually, lenders want to keep the monthly housing payments under 28% of gross monthly income – considered as the threshold for the capacity to manage the monthly payments. The debt-to-income ratio is the value of the sum of all your monthly debt payments divided by your gross monthly income.
A good credit score. As credit score is one key factor for loan approval, an application unapproved because of a not-so-good credit score is not surprising at all. There are, in fact, instances of applications denied despite a healthy credit score. Lenders agree to approve and give the lowest interest possible to clients with a credit score of 760 or higher.
The equity of your home. Consider this: if you have “negative equity,” it may not make sense to go for a home loan refinance in Phoenix, AZ. That is because if the value of your home is now less than it was when you started your mortgage, then it defeats the purpose of refinancing. Knowing how much equity is in your home is an essential deciding factor in whether or not to consider refinancing.
The break-even point. The break-even point allows you to determine if it makes sense to refinance your mortgage. It is when you figure out whether or not your monthly savings (from mortgage refinance) can cover the costs. For instance, if the total refinancing cost is USD 3600 and you save USD 100 per month, it will take three years to recoup your costs. Therefore, refinancing may not make sense if, later on, you decide to sell your home within that duration.
Are you looking for a mortgage expert to help you with home loan refinance in Phoenix, AZ? Consider Homeplus Mortgage today.