Deciding When To Do A Refinance:
This is a very important decision and one that has implications that can last for years. There are some important things to keep in mind when making a decision to refinance. Before we get to that there are two simple rules I suggest you follow if you chose to refinance your current mortgage:
- Only obtain quotes from reputable mortgage companies with an established history.
- Make sure the Loan Officer you are working with has experience; at least five years - ideally ten years or more.
How do you go about finding out that information? You can do your research online and it should only take a few minutes. Go to the Better Business Bureau's website, Zillow and the NMLS consumer website and you'll be able to find out a lot about the mortgage company and the Loan Officer. If you live in California you can visit the CA DRE as well.
Checking Current Mortgage Rates:
But before you hunt down 2-3 mortgage companies to get quotes from you first have to decide if it make sense to refinance. Obviously a big part of that decision is where are mortgage rates at. We suggest you search online for reputable mortgage companies that post current mortgage rates. Keep in mind that some companies/websites have inaccurate information so only search for companies that have great reputations. Now that you have a good idea about where mortgage rates are at take the time to see if doing a refinance makes sense. If you are doing a cash out refinance then make sure the cash out is being used for a good purpose. Some examples are:
- To renovate your home
- Pay for medical expenses
- To help cover the cost of your Childs college tuition
If you are refinancing from a 30 year fixed to a 15 year fixed make sure the payment is something you can easily afford. When it comes to refinancing to get a lower rate; make sure the fees you're paying to do the refinance are not too high. Avoid paying two or three points to get a lower rate. Lastly; if you are refinancing your current mortgage to get a lower rate you probably want to start looking when mortgage rates are around .50% lower or more. But again; make sure the fees are not too high otherwise it may not make sense.
Loan Programs For Home Owners:
The two main programs home owners consider are the Conforming loan program and the FHA home loan program. Both options are great for home owners to consider. In fact if you have a FHA home loan now and are considering a refinance of that mortgage you definitely want to check out the FHA Streamlined Refinance home loan program - it's one of the best ones out there. No income docs and no appraisal. Really easy refinance and you can close quickly. But you must have a FHA loan currently to take advantage of this great program. Conforming loan program offer limited documentation options as well as sometimes a home owner can get an appraisal waiver so they too don't have to do an appraisal. And the good news about Conforming loans? Provided you have 20% equity (or more) in your home then you do not need Private Mortgage Insurance (PMI).