Save money for home cost
A home mortgage finance is not always easy to handle especially when it comes to beginner lenders who have strict policies and lengthy approval processes that make it difficult to request a loan.

The founder and CEO of, Anthony Hsieh says, “Homeowners today need to be triathletes to qualify for a loan, with great income, great credit and great value in their home.”

Before choosing to refinance your home mortgage, you should ask the following six questions.

Do I have equity in my home?

Homeowners should ideally have 20 percent equity in their home in order to sign up for a loan request without paying private mortgage insurance. This may badly affect the benefit of refinancing and result in making homeowners owe more money than the actual cost of their home. Vice President of Home Savings for W.J. Bradley Mortgage, Roy Meshel, states that going for a refinance without sufficient equity only depreciates the value of a house. Another thing that impacts your ability to qualify for a loan is the borrower’s credit score. For qualifying to get a refinance loan, you need to have a good borrower credit score.

What are my financial goals?

Most homeowners opt for refinancing to reduce their monthly installments. A good mortgage calculator may guide you to decide about your installment plans as well as reduce the interest amounts. Patrick Cunningham, vice president of Home Savings & Trust Mortgage says, “Some people are restructuring their loans to a 20, 15, or 10-year mortgage, which works well for people with plenty of disposable income, but I worry that people are too focused on paying off their mortgage and not integrating this decision with their overall financial plan.”

What are the terms of my current loan?

When going for a refinance on your home, another important question that you need to ask is about the terms and conditions of your current loan. When it comes to terms and conditions, the interest rate and its fluctuation is one of the biggest financial concerns for homeowners. It is advisable for borrowers to stick to fixed rate loans rather than variable rates. Cunningham explains that some borrowers can take advantage by going with the current ARM.

How long do I have to stay in this home?

When asking for a refinance for your home, you should be certain about the tenure you plan to spend in your home. Mortgage professionals, in general, inform borrowers that a refinance may cost them 3 to 6 percent more than the actual cost. Cunningham makes it simpler to understand for borrowers by stating that if the break-even tends to happen at 15 months but you still plan to stay in that house for the next five or more years, it is good to go for refinancing. However, if you plan to move in 2 years, then refinancing is not a good option.

Am I sufficient with my credit score?

Your borrower credit score is an important factor that plays a vital role in getting a good mortgage rate. For any mortgage, it is essential to have a good credit score because, without the score, it becomes troublesome for you to qualify for mortgage. Ideally borrower’s should have a score of 720 or more. Any credit score less than 620 may cause hassles in getting approved for mortgage.

Do I have a second mortgage or line of credit?

Getting a second loan may cause the borrower extra stress. It comes with additional complexity and borrowers might lose track of payment schedules. Cunningham explains this by stating that borrowers have the option of paying off the first loan and then entering into the second loan or they can combine both loans by making them into one large loan. It is better to keep a record of your payment schedules in order to avoid troubles.

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