Concerns You'll Likely Have When Refinancing A Mortgage
Are you looking to refinance your home, but have some concerns about doing it? If so, you'll likely have the following questions that you want to know the answer to.
Will Refinancing Impact Your Credit Score?
Borrowing money through a loan will have an impact on your credit score. There is going to be a hard inquiry when you apply for a refinance, which will temporarily lower your credit score. In addition, there can be credit utilization changes that will impact your credit score, especially if your loan is larger when refinancing. If your new payment is too big and you have trouble paying it, those missed payments can also have an impact as well.
Are There Closing Costs Involved When Refinancing?
It's important that you look at the entire picture when determining if it is worth refinancing. This includes considering the closing costs that you pay for your mortgage. There will be fees for the application, appraisal, title search, recording, underwriting, and escrow to name a few. Thankfully, your lender can provide you with a good faith estimate on what all those closing costs are so that you know what to expect.
Is It Possible To Be Ineligible For A Refinance?
You may assume that there will be no problem getting a mortgage refinance because you are essentially replacing one loan with another. However, it is not that simple, which is why you go through the whole application process again. Your credit may have been fine when you originally applied for the loan, but it has changed since then. Having a high loan-to-value ratio, lower income, and being in poor standing with your current mortgage can all lead to being denied by a lender.
What Happens If Interest Rates Go Down In The Future?
If you're worried about interest rates going down even further in the future, know that there is no limit to how many times you can refinance a home. However, each time you do so you will pay those closing costs, which you need to break even on with the lower interest rate to make it worth it. Your lender can help you know how many months it will take to start saving money on your home refinance so that you can determine when it would be appropriate to refinance again.
Reach out to a mortgage lender near you for more information on mortgage refinancing programs.