Some Do's and Don'ts to Get Maximum Benefit From Refinancing

Refinancing your mortgage is often a great way to save money, reduce interest rates, and even pay off your home early. But to benefit fully from your refinancing experience, you first need to avoid some common pitfalls and make sure you take a few important steps. To help you with this, discover a few key do's and don'ts for refinancing any mortgage.

Do Shop Around

Today's homeowners have a wide variety of choices for loan terms. So do not settle for the first offer that comes along or the offer your current company may make. Instead, take some time to shop around for terms that are right for you. This includes not only the interest rates but also low fees and closing costs as well as no potentially risky clauses and terms.

Don't Forget to Check Your Old Mortgage

Before you decide to refinance or take any steps toward it, check your old mortgage terms. Many homeowners who entered into a mortgage loan years ago do not recall all the terms they agreed to. This can be an expensive omission if you are not careful. 

Take a few moments to assess any potential problems in paying off your old mortgage early, such as an early payment fee. In addition, inquire about any issues that may come up related to a second mortgage.

Do Fix Your Credit First

Just as with your initial mortgage, your credit score is an important part of the refinancing puzzle. Check your credit before you even decide on refinancing. Clean up any errors and maximize the right factors within your credit history. The process of polishing your credit score can take a few months, so be patient if you have anything that can be fixed. The savings are worth the effort.

Don't Assume Cash Is King

A cash-out mortgage is one where you finance more than you currently owe on the loan, then use the difference to pay off some other debt or renovate the home. This can be a great tool for many homeowners.

However, before you assume you should take that cash, honestly assess whether it is the right move overall. Would you be better off with a shorter mortgage or lower payments? Crunch the numbers and consider your own unique financial situation and personality before making this big decision.

Do Get a Proper Valuation

Along with good credit, the other big factor in refinancing for maximum savings is a good valuation of your home.

You can approach this task in many ways, but one of the best is to consult with a local real estate agent. While you may be able to get a price range from online home valuation sites, do not rely on these for this important step. You may even want to appraise the home, which often includes recommended changes to boost value.

Don't Skip Negotiation

You can negotiate many of the terms on your new mortgage. This might start with negotiation on some avoidable fees, but you can often also negotiate on interest rates, length of the mortgage, and specific clauses in the contract.

Use negotiations, however, to focus on those elements that bring you the most bang for your buck. For example, a lower interest rate might bring much more value overall than saving on a few fees. 

Want to know more about the do's and don'ts of refinancing? Start by speaking with the finance professionals at Secure One Capital Corporation. We will help you get the answers you need, avoid unnecessary problems, and find the loan that is right for you. Call today to talk to our team.