Questions To Ask Before You Refinance Your Mortgage

1. What is the purpose of the refinance? Do you want to pay less interest or lower your monthly payment? Do you want to get out of a variable rate mortgage and lock in a low rate?
2. How long have you been in your property? And how long do you plan to stay in the property?
3. Can you qualify?
4. Do you have enough cash to cover the the closing costs?
5. Have you shopped around for the best rate?Why Do You Want To Refinance? There are three reasons why people consider refinancing their mortgage:The savings from locking in a lower interest rate can be considerable. For example, a $200,000 mortgage at 5.5% would cost $43,995 more over 30 years than a 4.5% mortgage. Clearly that is savings worth chasing.

   Tip: The best way to save money on your mortgage is to pay off your mortgage faster. When looking to refinance, try to get a 15-year mortgage. If you can’t afford the payments, make sure you pay extra every month on your new 30 year mortgage to ensure you aren’t staying in debt longer than you should.How Long Have You Been in Your Property? And How Long Do You Plan To Stay?

   In the first years of your mortgage, most of your payment goes towards interest. On your first payment, expect 81% of the payment to go towards interest. On your last payment, only 0.5% of the payment goes towards interest.

   Can You Qualify? 

   Although it is starting to get easier to qualify, mortgage standards remain tight by historic standards. Typically, the three most important parts of your application would be your credit score, LTV and debt-to-income ratio, free credit scores (like VantageScore from CreditKarma or the FICO on your credit card statement) are good proxies. According to the Fannie Mae guide, you will want a credit score above 660.

   Do You Have the Cash To Cover Closing Costs?

   Closing costs are not small. On a $200,000 mortgage, estimated closing costs at Wells Fargo are $6,514. Many lenders will allow you to finance the closing costs, subject to the LTV. If you are trying to reduce your monthly payment, that might be just fine.

   Have You Shopped for the Best Mortgage Rate

   When looking around for a mortgage, there are still surprising rate variations. The CFPB offers a mortgage rate tool to help you see the best rates for your profile.

https://www.forbes.com/sites/nickclements/2017/01/27/5-questions-to-ask-before-you-refinance-your-mortgage/#34bc04c76901