The mortgage industry can be a complicated subject most especially for beginners. There are many industry jargons that, when misunderstood, could lead to a decision that isn’t favorable to borrowers. With this, it makes sense to ask questions. It is beneficial to ask for assistance from experts.
Speaking of asking questions… There are several questions that you need to ask and answer before you even pick up your phone and call a prospective lender to express your intent to apply for mortgage refinancing.
How long is my current mortgage? It does not make sense, for instance, to apply for a 15-year mortgage refinance (or above) if you only have 5 to 10 remaining years on your current loan. That is because you might just end up paying more rather than saving some amount.
Do I intend to stay for a long time at this home subject for refinancing? If you do not have any plan to stay in your home longer than, shall we say, 3 years, then you might want to reconsider home loan refi, Irvine, CA. The reason is that it would take a longer time to recoup the costs of refinancing. To figure it out, divide the amount you’ll pay in fees by the amount you’ll save each month to get the number of months to break-even on your loan.
Is my home equity good enough? Your equity is the percentage of the home that you own outright. In other words, it is the portion of your home that is not currently mortgaged. It grows as you pay down your loan.
Equity is one of the requirements that a lender will look at when you apply for a home loan refi, Irvine, CA. In general, they expect at least 15% to 20% equity in your property.
Does my current mortgage have a prepayment penalty? If your current mortgage has a prepayment penalty, you might be charged a fee if you go for refinance. That is because, it would mean that you are paying off the loan before its intended due date. You might find this as an unfair deal but that’s how the industry works. So, figure out the number and do what the number tells you.