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Refinance Tips

Many homeowners are looking to take advantage of the historically low interest rates by refinancing their current mortgage. Refinances can be a great way to lower your monthly payment, or shorten your loan term. Below are a few tips to keep you on the right track when refinancing your mortgage:

1. Know how long you’ll be in your home

When do you plan to move? Your monthly payment may go down with a refinance, but whether that saves you money in the long run depends on how long it takes to make back the money you spent for the new loan. When you start the new loan, your first payments go almost exclusively to interest. If you sell the house after two years, you save money by making lower payments for two years, but you actually owe more on the loan than you did in the first place. A mortgage advisor can help you calculate your breakeven point and decide if a refinance is right for you.

2. Be careful with advertisements

A lot of the initial information you receive about refinancing will probably come from advertisements. Although this information can be helpful, keep in mind that these are marketing materials--the ads and mailings are designed to make the mortgage look as attractive as possible. These advertisements may play up low initial interest rates and monthly payments, without emphasizing that those rates and payments could increase substantially later. Be sure to get all the facts and make sure any offers you consider meet your financial needs.

Tip: If there is a big difference between the initial interest rate and the APR listed in the ad, it may mean that there are high fees associated with the loan.

3. Repair your credit before you apply

Pull a copy of your credit report before beginning the refinancing process. You want to give yourself ample time to clear up any credit mistakes and have your best possible score for the qualification process. The higher you credit score is, the more likely you are to receive the interest rate and mortgage that you want.

Contact Information
Mark Martinez
Sr. Mortgage Consultant NMLS #338882
Office: (714) 619-5607
Cell: (714) 299-1972
Fax: (888) 511-6275
Email: Send Email
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