Interest rates are at near-record lows, but that doesn’t mean refinancing at this point is necessarily right for you. You need to know your credit score and take various details into consideration before you decide to refinance your mortgage.
One of the reasons why you need to figure out what your credit score currently is because that can greatly impact what interest rate that you can secure. There are there different credit bureaus including Equifax, Trans Union and Experian. If any of these companies’ reports contain inaccurate information on them, then this could lower your credit score. This could cause you to be locked in at a much higher interest rate that the current record lows.
Knowing how much equity you’ve built up in your home can also aid you in determining whether refinancing makes sense. Lenders typically don’t loan more than 80 to 90% of a home’s value. You may, therefore, find it prudent to hold off on refinancing your home if you have less than 80% equity built up in your property right now.
You should know that there are closing costs and other fees that you have to pay when you refinance your home. The money that you are required to pay covers application, appraisal fees, inspection, attorneys and closing fees. You may also be required to pay title search and insurance costs. The combination of those costs could end up making it cost-prohibitive to refinance your mortgage. Closing costs can come in anywhere between two to three percent of your property’s value.
There is a no-cost refinancing option. You, as the homeowner, generally have to pay higher interest rates or agree to have fees tacked onto the back end of your loan to qualify for one of these refinance options. Georgia homeowners who pursue this option often end up paying more in interest and fees throughout the loan than they would have had they paid the closing costs upfront.
Refinancing isn’t as simple as finding the lowest possible interest rate. Fees, a low appraisal, lack of equity and your credit score all may impact whether this is your best option. A refinancing attorney can review this information with you to aid you in making a decision that’s right for you and your family.