Last week, mortgage rates rose by 8 basis points to 4.05% for a 30-year, fixed interest mortgage loan. This is up from 3.51% a month ago. While this rise in rate sounds scary, the actual dollar difference comes down to an extra $4.61 per $100,000 financed. Although there are some fears regarding rising mortgage rates and refinancing, the truth is no one truly knows where the rates are headed, if anywhere. Regardless of your stance on the rate trends, refinancing your mortgage loan could be a good solution to lower your monthly payment and free up some space in your financial spreadsheet each month.
Rising Mortgage Rates and Refinancing
First, check your credit score. Refinancing an existing mortgage loan requires certain credit conditions just like a new mortgage. Make sure your credit score is good enough to secure a good loan, otherwise refinancing could leave you with terms and interest rates worse than you already have.
Second, shop around for the right lender. Not all lenders are the same and many are willing to offer their best if they think they have competitors to beat. Be prepared to ask questions and find out details regarding the interest rate, insurance fees, closing costs and if there is a pre-payment penalty. Compare lenders and find the one that offers the best terms and conditions before you apply.
Last, come to the application table prepared. Have all of your financial statements and documents such as 6 months worth of paystubs, past two years of tax returns, and three months worth of bank statements. The more information you can provide the better chances of a quick and easy refinance with great lending terms.
Refinancing isn’t for everyone, especially if you are facing money troubles. If you are considering refinancing out of fear of losing your home because you are under threat of missing a mortgage payment or have already defaulted on your loan, contact a bankruptcy lawyer in Houston to discuss your options.