September 19, 2024
Are you looking for a refinance loan? Refinancing your home loan can be a smart move for some homeowners, especially in times of falling rates.
A 2024 Fed rate cut of half a percent means mortgage loan rates may soon begin coming back down to earth, however gradually that process may be.
Potentially lower rates mean more borrowing options, especially in expensive housing markets like New York, California, and Washington, D.C. Smaller housing markets may also benefit.
More affordable loans, rising property values (depending on the market), and the ability to pull more cash out of the home in a refi loan situation make applying more attractive.
Is your long-term home loan goal to save more money over the term of the mortgage? Or do you need lower mortgage payments now to shore up your financial bottom line?
When Should I Start Preparing For My Refinance Loan?
The best answer? As early as you can. As soon as you feel you want to explore your refi loan options, begin reviewing your credit reports and your record of on-time payments.
There should be NO late / missed payments for 12 months leading up to your loan application.
Should I Use My Current Lender?
Shop around. You may well end up using your current lender after all, but you won’t know who has the best terms until you ask. Some online sources indicate that you can save as much as $2 thousand by shopping around for a lender and comparing terms/conditions.
Your current lender may offer you a better deal if you shop around for a better loan and then come back to your current bank and ask to match or beat that offer.
What Do You Need The Loan To Help You With?
This is one of the most important questions you can ask about your refinance loan.
Do you need lower payments? A better interest rate? BOTH? Believe it or not, you may be able to negotiate an FHA refinance loan that could potentially do both thanks to the FHA Streamline Mortgage.
Much depends on your specific needs and qualifications; that said, it’s an option worth exploring.
In early 2024, FHA Streamline options were not viable due to higher mortgage rates. But after the Fed’s rate cut, the option may become more attractive as rates begin to come down.
Streamline loans do not provide cash out at the closing time; and that cash back is something not all borrowers need.
Do you seek an FHA refi loan with cash back at closing time? There is a loan for that, too, the FHA cash-out refinance. Another type of FHA refinance loan can help you repair or remodel your house simultaneously, known as the FHA 203(k) rehabilitation mortgage.
Should I Finance Closing Costs And Appraisal Fees?
If you add closing costs or other expenses to the loan, your mortgage payment could be higher. To prevent higher monthly payments, pay as many of the closing costs in cash as you can.
Will There Be A Required Appraisal?
Any home loan refinance featuring cash back requires an appraisal. So will loans that require the current value of the home to determine the loan amount. Save up for appraisal fees in the planning stages of your home loan to keep your monthly payments low.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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