Are you interested in refinancing your mortgage? We have some tips and advice for you to help you get started.
What a mortgage refinance does is it will replace your present mortgage with a new loan. The loan can have different terms and conditions, such as moving to a lower period with an adjustable or fixed interest rate. Generally, the typical change is a lower interest rate. Mortgage refinancing can also allow you to lower your monthly payment. By doing this, you can save money on interest over the lifetime of your loan. You can also pay off your mortgage sooner and draw from your home’s equity if you need funds for significant expenses or investments. In this blog post, we have some tips to help start your journey to refinancing your mortgage.
Some tips for mortgage refinancing
Keep an eye on your credit score and DTI ratio: When planning to refinance your mortgage, you must have a good credit score. With Experian, if you have a credit score of 740 or more, it is considered exceptional. However, it would help if you kept trying to keep a minimum of 640 to qualify without any hassle. Your debt-to-income ratio should also be on the lower side. If you can spend 43% or less of your income on debt payments, you can likely take on another debt payment.
Equity: Your home's equity is a significant factor when considering refinancing. Your equity is a part of your loan-to-value ratio and similar to your DTI ratio; if it's on the lower side, you will have the upper hand in negotiating your mortgage refinance terms and conditions and the interest rate.
Eliminating Private Mortgage Insurance (PMI): If you have a financial goal of removing your PMI, then mortgage refinancing can be a great idea. All you need to do is built at least 20% equity in your property; that's it.
Rate shopping: Explore the mortgage market and compare offers before you settle on one. Your credit score will not take an impact if you apply to several lenders if you apply for all to all of them within a 14-day window.
Home appraisal: As your property is the collateral for the mortgage loan, it may be a good idea to get your home professionally appraised by a valuer. How much your home is appraised for can play a strong role in your refinance offer.
Locking in mortgage rates: You should know that mortgage rates may fluctuate throughout the year and can go higher due to inflation. Consider locking in your refinance rate as soon as possible so your quoted interest rate does not rise even when the national rates do.
We hope these tips will help you when you choose to apply for mortgage refinancing. You can also hire an expert if you need help. For mortgage refinance in Mississauga and mortgage refinance in Brampton, you can contact Harpreet Puri Mortgage Agent. They are qualified mortgage brokers who will make sure all your financial needs are met.
