Posted on: December 21, 2012
If you have a conventional home mortgage loan that carries an interest rate that is higher than the national average, you may be in a position to refinance your loan and save money on your monthly mortgage payment. There are several options to choose from depending on your current loan and specific lending needs.
Steps to Obtain a Conventional Refinance
As you start the refinance process, consider your individual financial needs and decide what you expect to get out of a refinance. Understanding your spending or savings goals will help you determine which refinance option will work best for you.
Some home owners are interested in saving money immediately, while others may be interested in spending a bit more now and paying off their home more quickly to save on interest payments in the long run. Evaluating your individual financial goals will help you decide which refinance option is best for you.
Making sure you have a clean credit history and a strong credit score is important for obtaining the best refinance rates and savings. Make sure that all of your past-due bills are paid off and that your credit card balance is at or below 30% of your limit.
When shopping for your refinance, be sure to contact multiple mortgage lenders who can give you a quote and allow you to compare rates, points, closing costs, and any other financial obligations that you might be required to pay. All of the small details can really add up and make an attractive refinance option actually cost you more than you anticipate.
Once you have selected a lender and have arranged the details of your refinance, your lender will help you close and finalize on your new loan. They will have specific payment information for you to help you make your payments easily and on time.
When selecting a refinance, you have three basic options:
Depending on your current loan, you have the choice to use one or more of the above options. If you currently have a 30-year fixed loan, you have the option to keep the same 30-year term but save with a lower interest rate, or you can refinance to a shorter 15-year term. This might increase your monthly mortgage payment as the loan term is shorter, but will save you money on interest payments in the long run.
If you currently have an adjustable rate mortgage (ARM), you may have the option to lock in to a fixed-rate loan. Depending on your current interest rate and the available refinance rates, you may be able to lower your interest rate and save money with an equal or shorter term loan as well.
Conventional Refinance Savings
Follow the steps to get started on your home refinance. Determine your needs and focus on finding a lender who can beat your interest rate and offer you a well-priced refinance option. Keep in mind that if you have a competitive interest rate, it might not be possible for a lender to help you refinance to an even lower rate. To find out more about your refinance options, fill out the form to speak to a lender who can help you with the refinance process.