What To Know About Refinancing

Refinancing your home can have many benefits. First, you’ll be able to take out money to address immediate needs in your home like improvement projects. These things can only benefit your home’s value in the long term. Before you take the leap to refinance your home, you should be sure that you’re actually ready to take this step. Knowing what you’re in for allows the entire process to go more smoothly. Read on for tip to understand more about the refinancing process and what you’ll need.

Know Your Finances

Just like when you initially purchase a home, refinancing your home will require you to have your finances in order. Take a look at your budget and needs and determine if it makes sense for you to refinance your home. For example, your employment status or distance from life goals like retirement could have a factor on the term of the loan you’re willing to take out. A 15-year mortgage may make more sense than a 30-year mortgage, but your monthly payments will also be a bit higher. You need to take all of this into consideration before you refinance. 

Your credit score will also be a factor in refinancing your home just as it was when you initially bought your house. Check your score and see if any red flags pop up. Getting these corrected earlier rather than later can help you to get a better rate on the loan. There are plenty of free services that exist online that allow you to check your credit score.   

Know The Value Of Your Home


If you know the value of your home and understand how much equity you’ve built up in the house, it will give you a better idea of your refinancing options. You can’t get more than 70% of what your home is currently worth as a cash-out refinance. If you owe more than your home is worth, you might be in a tighter financial situation than you realize. You can do plenty of things to increase the value of your home; it will just take some time. You may even consider selling your house, making a move, and starting from scratch. Financially, this could be the best option, and you could also end up with a better interest rate.

Getting your finances in order and the simple act of preparing for a home refinance could give you some insight into your financial picture after being a homeowner for some time.

Stay out of debt. Don’t open new accounts. Pay down any debt you may have. That is the standard advice for people who are trying to get in good financial standing before buying a home or refinancing a home. 

Do some research and find the best home loan refinance rates around. Then, look into your own finances and decide what’s best for you regarding refinancing your home loan.      

Is Being Pre-Qualified The Same As Being Pre-Approved?

If you’re in the market to buy a home, you’re probably learning many new vocabulary words. Pre-approved and pre-qualified are some buzz words that you’ll need to know. There’s a big difference in the two and how each can help you in the home buying process, so you’ll want to educate yourself. With the proper preparation and knowledge, the home buying process will be much easier for you.  

Pre-Qualification

This is actually the initial step that you should take in the home buying process. Being pre-qualified allows your lender to get some key information from you. Make no mistake that getting pre-qualified is not the same thing as getting pre-approved.

The qualification process allows you to understand how much house you’ll be able to afford. Your lender will look at your income, assets, and general financial picture. There’s not a whole lot of information that your lender actually needs to get you pre-qualified. Many buyers make the mistake of interchanging the words qualified and approval. They think that once they have been pre-qualified, they have been approved for a certain amount as well. Since the pre-qualification process isn’t as in-depth, you could be “qualified” to buy a home that you actually can’t afford once you dig a bit deeper into your financial situation. 

Being Pre-Approved

Getting pre-approved requires a bit more work on your part. You’ll need to provide your lender with a host of information including income statements, bank account statements, assets, and more. Your lender will take a look at your credit history and credit score. All of these numbers will go into a formula and help your lender determine a safe amount of money that you’ll be able to borrow for a house. Things like your credit score and credit history will have an impact on the type of interest rate that you’ll get for the home. The better your credit score, the better the interest rate will be that you’re offered. Being pre-approved will also be a big help to you when you decide to put an offer in on a home since you’ll be seen as a buyer who is serious and dependable.  

Things To Think About

Although getting pre-qualified is fairly simple, it’s a good step to take to understand your finances and the home buying process. Don’t take the pre-qualification numbers as set in stone, just simply use them as a guide. 

Do some investigating on your own before you reach the pre-approval stage. Look at your income, debts, and expenses. See if there is anything that can be paid down before you take the leap to the next step. Check your credit report and be sure that there aren’t any errors on the report that need to be remedied. Finally, look at your credit score and see if there’s anything that you can do better such as make more consistent on-time payments or pay down debt for a more desirable debt-to-income ratio.

What’s Included In Your Mortgage

Buy a house and you probably just made the largest purchase of your life, a decision that will impact you daily. Buy the right house and you can finally start to feel rooted, as if you found the place where you feel balanced and centered. You can make this house your own, hanging original art pieces and pictures on the walls and filling the space with furniture and knick knacks that showcase your remarkable personality, your amazing style.

Stop guessing how much house you can afford

If you let yourself develop your creative muscle, there’s a strong likelihood that you created those original art pieces yourself. Clearly, buying a house is about more than the base price of the house. It’s about stepping into new experiences. Allow those experiences to be rewarding, certainly financially stress free. But, that won’t happen like magic. It takes thought, action and understanding. You can do it.

You must know everything that you’ll be responsible to pay for before you buy a house. It could keep you out of foreclosure should you or your spouse get laid off. It could keep you from taking on debt that will put your finances in a gripping headlock. Specific fees that you may incur when you buy a house vary, depending on the lender. However, general fees and costs you can expect to be responsible for include:

  • Base price of the house (It’s easy to think that the base mortgage is all you’ll have to repay when you buy a house. But, although it’s the largest chunk of what goes into a mortgage, the base price or principal of a house is only one piece of the costs.)
  • Interest or adjustable rate mortgage (Adjustable interest rates may start lower, but they can shift upwards and put your mortgage out of reach. Research lenders. Make sure you’re not working with a predatory lender.)
  • Property taxes
  • Down payment (The bigger the down payment you can put on your new house, the better. It can lower your monthly mortgage payments significantly.)
  • Closing costs (Try to negotiate a deal that splits closing costs with sellers. You might even get a deal where house sellers pay all of the closing costs.)
  • Homeowner’s association fees
  • Mortgage insurance
  • Homeowners insurance (This is separate from the mortgage insurance. Homeowners insurance covers the costs of damages the house may incur during natural and human-made disasters. This insurance is similar to car insurance.)
  • House inspection fees

Eliminating mortgage fee surprises helps you enjoy your home

There is more than one way to become a homeowner. Options include rent-to-own, a newly built house and buying an old house that you restore. Housing communities also vary, giving you the chance to move into communal housing neighborhoods, single family homes, tiny houses, mobile homes and elegant Victorian houses. You could also make the land more a priority than your living space, especially if you aim to start a farm or another outdoor business.

Go with the housing option that best matches your personal needs. You’re probably going to be spending a lot of time in your new home. But, don’t just fall in love with your house. Set yourself up for financial success. Be aware of all costs that go into your mortgage before you buy a house. Also, understand additional costs that you are responsible for paying a lender that aren’t built into your monthly mortgage payments. Shop for and buy a house with your eyes wide open.

How to Choose the Right Mortgage Option

Buying a home represents a dream come true for many individuals. However, to transform this dream into a reality, you’ll likely need to qualify for a mortgage.

Finding the right mortgage may seem difficult, particularly for a first-time homebuyer. Fortunately, we’re here to help you make sense of all of the mortgage options at your disposal so you can select the right option based on your budget and lifestyle.

Here’s a closer look at three of the most common mortgage options for homebuyers.

1. Fixed-Rate

With a fixed-rate mortgage, there are no cost fluctuations. This means that you’ll pay the same amount each month for the duration of your mortgage, regardless of economic conditions.

For example, if you sign up for a 15- or 30-year fixed-rate mortgage, you’ll wind up paying the same amount each month until your mortgage is paid in full. In some instances, you may even be able to pay off your mortgage early without penalties.

A fixed-rate mortgage often serves as a great option for those who don’t want to worry about mortgage bills that may fluctuate over the years. Instead, this type of mortgage guarantees that you’ll be able to pay a consistent monthly amount for the life of your loan.

2. Adjustable-Rate

An adjustable-rate mortgage represents the exact opposite of its fixed-rate counterpart. The costs associated with this type of mortgage will change over time, which means you may wind up paying a fixed interest rate for the first few years of your loan and watch this rate go up a few years later.

For instance, a 5/1 adjustable-rate mortgage means that your interest rate is locked in for the first five years of your loan. After this period, the interest rate will adjust annually. Therefore, a rising interest rate may force you to allocate additional funds to cover your mortgage costs in the future.

An adjustable-rate mortgage may prove to be a viable option if you plan to live in a home for only a short amount of time. Or, if you’re a college student or young professional, an adjustable-rate mortgage may help you pay less for a home now, secure your dream job and become financially stable by the time your initial interest rate period ends.

3. VA Loans

The U.S. Department of Veterans Affairs (VA) provides loans to military service members and their families. These loans are backed by the government and enable individuals to receive complete financing for a house. Thus, with a VA loan, an individual is not required to make a down payment on a house.

If you ever have concerns or questions about mortgage loans, banks and credit unions are available to help. Also, your real estate agent may be able to offer mortgage insights and tips to ensure you can secure a mortgage quickly and effortlessly.

Learn about all of the mortgage options that are available, and by doing so, you can move one step closer to buying a home that matches your budget and lifestyle.