BEFORE YOU REFINANCE
Before you make the decision to refinance your mortgage, complete the important checklist below.
Define Refinance Goal
Do you want to shorten your loan term? Lower your interest rate or monthly mortgage payment? Withdraw cash for a home renovation project? Defining your refinance goal will determine what type of loan refinance you will need.
Locate Relevant Documents
A mortgage refinance is a new loan origination, and just like when you financed your original purchase you are going to need all of your important documents. Get your bank statements, W2s, pay stubs, government-issued identification, and other documents together ahead of time to streamline the process.
Compare the Alternatives
For example, if you are interested in a cash-out refinance to pay down other debt, explore alternative options and like payment plans with your credit cards or a student loan refinance and weigh your options before settling on a cash-out mortgage refinance.
Calculate the Cost to Switch
Since a mortgage refinance is a new loan origination, you will typically have to pay lender fees and closing costs. Meeting with a loan officer ahead of time can help you estimate how much those costs will add up and help you determine if you can afford a mortgage refinance at this time.
Calculate the “Break Even” Point
One of the most common reasons to refinance is to lower the monthly mortgage payment or overall cost of the loan. Since a refinance will be a new loan origination, make sure to calculate the “break even” point and determine how long it will take to start saving money with your mortgage refinance.