Who doesn’t want his own little place! Frankly speaking, every second person on earth dreams of owning a house. When making financial goals, the top priority for most people is to buy a house. But the main problem is that most of us don’t have the savings to do so right away. This is when a majority of people end up making mortgage loans.
Read - Tips to play smart while borrowing
While we try to choose wisely, sometimes in a hurry, mistakes happen, and we take out high-interest mortgage loans. However, there's usually no need to worry since such loans can be refinanced. By doing so, you basically mean to take another loan with a lower interest rate to pay off the earlier one.
Forbes | Refinancing may be the best way to repay your existing mortgage
According to experts, now is the best time to refinance your mortgage loans. Currently, the mortgage rates are hitting an all-time low with only 2.28% interest on a 15-year home loan plan. Some institutions are even offering it at a 2% interest, seeing the competition in the market.
So if you are thinking about refinancing, don't hesitate. Just follow these tips to get the best deal.
Do your homework
Always do the math beforehand. Check which refinancing plan will be better for you. Is it a 30-year or a 15-year one? Although Americans have been choosing the 30-year mortgage plan for decades because of lower monthly payments, keep in mind that you need to benefit in the long run, and this is possible if you go for the 15-year plan. While that means higher installments than the 30-year plan, it gives you a lesser total amount to pay in the long run.
Play smart while applying
Whenever you’re applying for a mortgage loan, try to be the best borrower the mortgaging firm has ever come across. Check your credit score before-hand and make necessary changes if required to increase it. None of the lenders want to give money to a candidate who they find doubtful or who can’t pay the loan within the given time frame.
Medium | Before applying for refinancing, check your credit score and, if needed, boost it in any way possible
Explore the market
Don’t be impulsive while selecting your home loan plan. Take a look around the market, visit different institutions, jot down the difference in interest rates, and calculate the amount that you’ll have to pay back. After you’re done, go for a mortgage loan that offers the lowest interest rate and lower overall payback amount. This way you’ll save a lot of money.
Make a hefty down payment
By making a hefty down payment, you can show your credibility to the lender and get a lower mortgage rate that, in turn, gives you the advantage of getting a low refinancing rate.
Read - How to find your perfect house?
Action News Jax | Making a hefty down payment can also get you in the good books of your lender
Summing it up
The pandemic has led to a reduction in mortgage rates. Moreover, with Biden as the new president, there are expected to be several tax policy changes. Who knows how long this low mortgage rate offer will last. So, get ready to make some money by refinancing your home loan.