By Robert Vandenbergh
With interest rates at historic lows, many Americans are choosing to refinance in order to reduce their monthly payment. Refinancing may be ideal for many homeowners, so it’s a good time to determine if it is the best option for you.
Below is a check list to help you weigh the pros and cons of refinancing.
Get a copy of your credit score – Today’s criteria are stricter than in the past with a credit score of 680 or above being preferred by many lenders. Consumers are allowed one free credit report per year.
Compare your current financial position to the last time you applied for a mortgage. Have you taken on more debt? Have you had a change in income? Have you held several jobs in a short period of time?
Consider how much equity you currently have in your house. If you don’t have 20% equity, you may be responsible to purchase private mortgage insurance, which could reduce the value of refinancing.
Do you have a second mortgage? The holder of that mortgage may not allow you to refinance your first mortgage. Check to see if you will be required to pay it off, if you can combine it under the new loan, or if the second mortgage can remain in place.
Your community bank is a great resource to find out more about refinancing. Lakeland Bank Personal Mortgage Consultants are available to help you explore refinancing options. For more information, visit lakelandbank.com, call 866-224-1379 or visit any of our office locations.
Are you planning to move in the next couple of years? If so, refinancing your home may not be cost-effective. Calculate the cost and benefit of refinancing.