General Refinance Considerations
Objectives
- Lower monthly payments
- Shorten loan term
- Switch from adjustable-rate to fixed-rate (or vice versa)
- Cash-out home equity for expenses or investments
Current Loan Details
- Remaining loan balance
- Current interest rate
- Remaining term
- Monthly payment
- Prepayment penalties (if any)
Market Conditions
- Current interest rates
- Economic forecasts
- Availability of special government programs or incentives
Eligibility Criteria
- Credit score requirements
- Debt-to-income ratio
- Loan-to-value ratio
Decision Factors
Break-even point (when the savings outweigh the costs)
New monthly payment amount
Total cost of new loan vs. old loan
Impacts on credit score
Where to start?
- Research multiple lenders
- Get quotes and loan estimates
- Compare interest rates
- Consider variable vs fixed rates
Comparison shop to get the best deal!
Costs and Fees
- Application fees
- Origination fees
- Appraisal fees
- Closing costs
- Private Mortgage Insurance (PMI) for home loans, if applicable
Documentation
- Proof of income (e.g., pay stubs, tax returns)
- Credit history report
- Property appraisal for home loans
- Current loan statements
- Asset verification (e.g., bank statements, investment accounts)
Post-Refinancing Actions
- Keep records of all refinancing documents
- Update auto-pay settings, if applicable
- Monitor credit report to ensure old loan is closed and new loan is accurately reported
- Reassess budget based on new monthly payments
Always consult with your loan officer to make sure you’re making the best decision for your specific circumstances.
