How do you refinance your home?
Posted by @TopMortgageRate
You made it through the hardest part: buying a home. Now, perhaps just a few years later, you’re ready to refinance your mortgage. How hard can it be? You may be surprised to find that it’s not a couple-of-emails and a-phone-call-or-two process. In fact, there may be more paperwork involved this time around than when you first bought, especially if you went through the mortgage process in the “low-doc” days.
Let’s consider some important initial steps of a mortgage refinance — and then run through the process step by step.
Your mortgage refinance strategyBefore you begin, it’s important to consider why you want to refinance your home loan in the first place. That guides the mortgage refinance process from the very beginning.
Lowering your payment is usually the goal. And it’s tempting to refinance with another full 30-year term to really knock down that monthly payment.
But that means you’ll end up taking even longer to pay off your house and paying more interest. You’ll want to take into account how much interest you’ve already paid on your old loan and how much you’ll pay with the refinance.
Loans are front-loaded with interest, so the longer you’ve been paying, the more each payment is going toward paying off the principal balance. By resisting the urge to extend your loan term (or, better yet, reducing it) and getting a lower interest rate, you can significantly reduce the amount of interest you pay over the life of the loan.
Choosing a suitable loan term for your mortgage refinance is a balancing act between an affordable monthly payment and reducing your borrowing costs.
See full article on nerdwallet.com