Refinancing your own home is a good way to benefit from one or more factors in today's real estate market. You may want to refinance to lock into a lower interest rate on your mortgage, save money, and have a lower mortgage payment. Alternatively, you might want to borrow against your home's equity so you can have extra funds to pay for other expenses, such as consolidating and paying off debt, making home renovations, or going on a vacation. With all the great aspects of completing a home refinance, here are some tips for you to have success doing so.
Understand Your Equity
A pretty big part of your home refinance is how much equity you have in your home. Your home may have a specific amount of equity based on how much you have paid down any prior mortgage, an increase in market home prices, or a combination of the two factors. It is important that you find out and professionally determine how much equity you have with your home so you can refinance and pull out the equity if you are going that route.
You can evaluate the market in your area to see what other properties that are most similar to your home are selling for. Because home prices are tied to the demand from buyers, this can fluctuate based on what the market in your area is doing. A professional realtor can help you calculate this market price analysis. Or you can arrange a professional home appraisal, which is going to pinpoint your home's value. A home appraisal will usually be required for your home's refinance to be finalized.
Consider the Costs
Along with refinancing your home, you will also need to look at the cost to do so. Your home's equity may be available for you to cash out and use, but there are going to be some costs that come along with the refinancing process.
The refinancing of a mortgage consists of actually paying off your existing mortgage with a new mortgage, which requires the traditional costs for the loan origination fee, application fee, appraisal fee, and any other costs that your mortgage broker will disclose to you. And don't forget that you will need to pay for title insurance and cover the title search to make sure there are no existing liens against the home. You might also have to pay for an inspection of your home, based on your area and the loan you are refinancing into. Then, for the closing of your refinancing process, plan to pay for closing costs, either with an attorney or the title company you are working with.
Contact a lender for more information about real estate refinancing.Share