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should i refinance my home loan

Should I Refinance My Home Loan?

https://www.arrowfinancialco.com/

introduction
INTRODUCTION

Every time the interest rates on mortgages drop, an awful lot of people refinance their home loans in the hope of saving some money. However, that is not always the case. If you are not careful enough, it can cost you more than you could save.

You pay a price for refinancing, which means you need to analyze if this cost is outweighed by the benefits you can reap for it. Here is a 3-step process which will guide you to determine whether refinancing is worth it or not.

step 1 look at your finances
STEP 1 – LOOK AT YOUR FINANCES

Firstly, you need to qualify for refinancing. The lenders typically check the following financial parameters of the applicant:

Credit Score – If your FICO credit score is 740 or higher, then you will be offered the lowest interest rate. However, if it is in 600s, then you will have to work on it.

Payment-to-Income Ratio (PTI) – Your income and expenditure are also scrutinized to ensure you can afford the mortgage. Ideally, your PTI should not be over 28% of gross earnings.

If your credit score has improved significantly, then you can refinance your debt to a much lower rate. Similarly, in case your pay scale moved to the next level, you can increase the size of the mortgages and get rid of the debt quickly.

step 2 compare mortgage rates
STEP 2 – COMPARE MORTGAGE RATES

The primary reason most people refinance is to reduce the monthly mortgages or make the loan more affordable. This can be done by switching from Adjustable Rate Mortgage (ARM) to Fixed Rate Mortgage (FRM) or from a 20-year repayment tenure to a 30-year one.

A thorough comparison will reveal whether refinancing offers more bang for your buck or not. While comparing, bear in mind that Residential Real Estate Loans have to be paid back with the application fee, closing cost, etc. in order to make a well-informed decision.

step 3 find your break even point
STEP 3 – FIND YOUR BREAK-EVEN POINT

Last but not the least, you also need to consider your stay in the estate. If you plan on moving soon, then refinancing does not make much sense. The reason being despite the reduced mortgage, you might not be able to recover the closing cost.

One more thing, the number of years left on the mortgage is also crucial. With 20 years left on your debt, refinancing to a fresh 30-year mortgage means you are basically pushing your home ownership even further. You should reconsider if you do not want to be under debt in retirement.

about us
ABOUT US

Need some financial assistance to buy your dream house or kick start your business? Not a problem. Have some office or home loans you need refinanced? Got that covered as well. One solution for all your financial needs – Arrow Financial.

The Arrow Financial Advantage:

  • Seasoned team of real estate gurus
  • Quick and simplified process
  • Relaxed qualification criteria
  • Complete assistance for pre-approval as well as the underwriting process
  • Competitive loan terms
contact us
CONTACT US

We are the most dependable commercial and residential loan provider in Rancho Cucamonga. For any additional information on our mortgage and refinance programs, take a look at our website: http://www.arrowfinancialco.com/

In case of any queries or for a free consultation, give us a ring at 951-634-2477 or drop a message on bb@arrowfinancialco.com

Our social media handles:

https://www.facebook.com/arrowfinancial/

https://twitter.com/arrow_financial

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