Do You Know The New Refi Rules?
Everyone is preaching "Refi! Refi! Refi!" these days. And you can't blame them; with record low record rates and various government initiatives being implemented, now is a great time to refinance.
However, while in the past, it was common sense to refinance only if there was a 1% difference between the rate on your existing loan and the current rate, now there are a few more things you should consider before refinancing:
1. Look at HARP
The Home Affordable Refinance Program is set out to give advantageous refinance terms towards borrowers. However, this only applies to mortgage dated March 2009 or earlier through Fannie Mae and Freddie Mac. Check with your loan officer to see if you're eligible.
2. Check Your Credit
The same as when you first got your loan, the rate is completely dependent on your credit. The best rates go to credit scores that are 740 or higher. Make sure you learn your credit score before applying for a refi.
3. Aim For a Shorter Term
Are you a few years into paying off your 30 year mortgage? Then don't refinance for another 30 year – try a 15 year. You can save tons on your interest on top of the low rates. Can't afford the increase in monthly payments that come with a 15 year mortgage? No problem, try a 20 year!