Posted: 1 Oct

Questions You Should Ask When Considering Mortgage Refinancing

refinancing mortgage

Mortgage refinancing can be daunting. However, looking at what your mortgage is made up of and what you pay as part of your mortgage, you will be able to clearly see what variables on the terms you are in control of and you must look at to consider mortgage refinancing. A few of these are listed below. Contact us to learn more.

Interest Rates 

The most important component of the mortgage you wish to refinance is the interest rate. This directly factors into the duration of your mortgage itself - typically a lower interest rate on the mortgage means you will be paying for a longer duration, which may mean you will cumulatively pay more interest than if you select a shorter term duration for refinancing. You must evaluate the duration and the interest rate together to see which option is the most affordable for you for mortgage refinancing

Duration

Another important component, duration is directly dependent on the mortgage's interest rate. The lower the interest rate is, typically the longer the mortgage duration will be. If you wish to pay off your mortgage quicker and can afford the higher interest payments, it is advisable to do so as typically a shorter duration mortgage can result in a lower cumulative interest payment. 

Qualifications 

You must also investigate whether you qualify for this mortgage or not. Mortgage brokers have certain criteria to fulfill in order to accept customers for mortgages and mortgage refinancing. According to Forbes, typically the three most important parts of your application are your credit score, debt-to-income ratio, and LTV (Loan-to-Value). If you satisfy these criteria, you are likely to qualify for mortgage refinancing. 

Other Household Debt

Analyzing your expenditures and investigating your budget will help you figure out where you can save more and how you can redirect funds. Before shopping for a mortgage or mortgage refinancing method, make sure you know where your money is going so you know the interest rate and duration you are seeking for your mortgage refinancing. Depending on how much you want to save, you can investigate what mortgage refinancing you may qualify for depending on your target interest rate and duration. 

Home Ownership

Last but not least, don' forget to take a look at the equity in your home and how long you plan to stay at the home for which you are refinancing your mortgage. The amount of equity can be found by subtracting the outstanding amount on the mortgage from the market value of the home. In addition, if you are staying in the house for a shorter amount of time, it makes it harder for the creditor to refinance your mortgage because you will not be able to match your closing costs on the mortgage refinance with your savings on the interest payments per month. Evaluating your home equity and duration of stay are two other key factors in mortgage refinancing. 

Mortgage Refinancing with BMC

Mortgage refinancing doesn’t need to be a big headache. If you are considering refinancing your mortgage but are feeling deterred by your less than stellar credit, contact our experts at BMC Mortgage and Investments. We will help you find the best solution for your situation.  

Learn More About USING YOUR HOME EQUITY TO QUALIFY FOR A LOAN