If you haven't been told to
refinance yet, we assume you've been living under a rock. The extremely low
interest rates aren't going to last for much longer, so many financial institutions
are letting everyone know that now is the time to save a significant amount of
money on your loans - yet people aren't doing it. What is their hesitation?
One of the most common
roadblocks that people run into is the cost of a refinance. If your argument is
that the refinance will cost just as much or more than the money you'll save, here
are some things to consider:
-
If you plan to be in your home for the full-term
of your mortgage, or even 5 years, the smallest amount of savings a month can
equal a big impact. See Next
Advisor's example of how much you can save with just a .4 decrease in your
interest rate.
-
If you did the math and your monthly payment
doesn't change, try looking for the value beyond that. If you want extra money
in your pocket, a refinance also allows you to cash in on the equity of your
home.
-
If you're concerned about how costly it gets
doing a refinance, it is possible to negotiate on the closing costs. While the
possibility to get everything waived is low, ask your lender where costs can be
reduced - you may be surprised at how much you can save. Another option is to
roll the closing costs into the loan itself. If your estimated savings are
overwhelmingly higher than the closing costs, this would be a good option to
avoid paying out-of-pocket.
Another roadblock that turns
people away is the amount of paperwork. Here is what we've learned from people
who've gone through the process:
-
It's not as much paperwork as you might think,
especially with it all being online. Unless you've gone through a significant
life change that impacts your financial status like a divorce or bankruptcy, it
should be as simple as uploading all your documents in one place and sign them
in a matter of minutes.
Lastly, credit score often scare
people away from refinancing, but we're here to tell you that if your credit
score if not where you want it to be, you have options:
-
Did you know that your lender can do a "soft
pull" of your credit that won't lower it? Then you can talk with your lender
about different scenarios before beginning the refinance process.
-
Credit scores are fixable. If you need to take a
couple months to focus on raising your credit score, especially after running
through those scenarios, you can improve your chances of refinancing and saving
money. Check out these fast, effective ways to improve your
credit score.
Talk to our experts at Telhio
Credit Union today to see if refinancing is right for you.
