Refinancing A Home Image

Refinancing Your Home

T.E. Cunningham Image

Don’t procrastinate any longer! Refinancing your home is not as complicated as it sounds, and can save you tens of thousands of dollars in interest over the years.

A good first move is to check your credit score. In fact, Janet McElroy, Senior Mortgage Consultant at Capitol Federal® in Wichita, advises it is a good practice to check your credit report information annually. 

“You should look for any incorrect reporting or information. You could also look for opportunities to improve your credit. For instance, reducing your overall debt is a way to increase your score, by doing things like paying off credit cards, a small auto loan balance or student loans. This can increase a borrower’s credit scores. Of course, the key thing is to make payments on time; anything 30 days past due is very concerning to potential lenders.”

There are plenty of free websites available to check your credit score. Also, once you have the “all clear” on your credit, don’t make major purchases and charges between approval and closing. This could potentially require an additional review by the underwriter and disrupt your closing date.

As you probably know, the housing market fluctuates - sometimes by surprising amounts. And that could be a good or bad thing when it comes to your home's value.

“The current Wichita market appears to be a seller’s market, which means the value of the home is typically appreciating, and there is an opportunity for the homeowner to sell at a higher price or have a higher value when the appraisal process is completed,” notes McElroy.

When it comes to refinancing, you want to consider the features of each loan, not just the interest rate. Closing costs are expenses you incur to get the loan; they include things like home appraisal fees, title searches, insurance, credit report charges and more. Obtaining the annual percentage rate (APR) is a good way to compare costs between lenders.   

Another thing to consider is who will be servicing your loan. Capitol Federal services the mortgage for the life of the loan – which is uncommon in the mortgage industry. This is very helpful when you have an insurance claim and need to get it taken care of right away.

If you are one of those homeowners who dream about being mortgage-free, the low-rate environment may be a good opportunity to refinance your 30-year mortgage into a 15- or 20-year loan. Be sure you can afford the slightly higher payments for the shorter loan and you have enough money saved for emergencies.  

“The last thing you want to do is have a high payment, that you are uncomfortable with later,” says McElroy. She indicated another way to accomplish the reduction in interest is to make additional principal payments each month at a comfortable level.   

Also, you should always ask if there is a penalty for paying off your loan early, which is what a prepayment penalty is. Capitol Federal does not assess such a penalty fee. 

One other note, if you have trouble paying your mortgage, don’t ignore your mortgage lender. Defaults are costly to the lender as well, and they may work with you to find a workable resolution.

Hopefully, these tips motivate you to check out your current mortgage rate. If you have an adjustable rate mortgage, you need to stay on top of your mortgage on a regular basis. You can check rates at any time in a variety of ways. For instance, Capitol Federal posts their rates in real time online. Whether you check online, or call your lender, you will want to stay vigilant on changes in the market. 

Think about the money you might save if you just take the time to check on your current mortgage today!

Equal Housing Lender

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Categories: Your Home, Strategies for Saving
Tags: Home Mortgages

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