By Tim McLaughlin, Sr. Vice President, Weichert Financial Services
To the borrowing public, lower interest rates generally mean a reason to refinance. Astute borrowers take advantage of low interest rate environments. What is the best plan for attacking a rate friendly market? The following facts are value added for anyone looking to refinance their current home mortgage in 2011.
1. Know Your Value: The number one reason home refinance loans are being rejected is that the appraisal of the clients home didn’t come back as anticipated. Basically, for a lender to refinance your home, there must be a certain level of equity in the transaction to make the scenario work. Otherwise, your refinance scenario may not be approved. Your knowledgeable Weichert Financial Gold Services Manager can help you understand the value and equity in your current home and how to make the transaction work.
2. Dig Up Your Documents: Make sure you have all necessary documents to avoid delays. This includes a copy of your current mortgage statement, current paystub showing year to date earnings, last year’s IRS tax returns (last two years if self-employed), and two forms of personal identification (one must be a government issued photo ID). Other documents may be required as well. If you don’t have these items, it will slow down the process, cause delays, and possibly cause you to miss this low interest rate window.
3. Choosing The Best Product: First off, you have to decide whether you are looking to reduce your payment or whether you are looking to reduce the term of your loan (or possibly both). A higher rate 30 year loan refinanced into a lower rate 30 year loan will reduce your payment. A higher rate 30 year loan refinanced into a lower rate 20 year, 15 year, or 10 year loan may keep your payment somewhat static, but will cut significant years off the duration of your loan and save years of interest (same with a 20 year into a 15/10, or a 15 year into a 10 year). Which scenario is best for you? Again, our knowledgeable Weichert Financial Gold Services Manager can help analyze what is best.
Not many in the markets expected rates to be this low again in August (or in 2011, for that matter). Did you miss the last refinance wave in 2010? Let’s not miss this one.