A Few Things to Consider About Refinancing a Mortgage
There are a lot of things to consider when you are looking at mortgages, especially when you are looking to refinance your current mortgage or refinance to get a new mortgage altogether. However, there are some things you should really consider that many people overlook when they are doing their searches and research.
One of the major things to look at is your debt-to-income ratio. This used to not be such a big deal when considering refinancing your mortgage because banks put less emphasis on this; however, in case you have not heard, there were some major rules set in place for mortgages at the start of 2014 that affect both purchase mortgages and refinanced mortgages. One of the big points in these new rules stated that your new debt-to-income ratio cannot exceed 43 percent. This means that your total monthly debts cannot be more than 43% of your monthly income. This means that you will have to do some work to make your debts lower if your mortgage refinance sets you above 43 percent. Some lenders will want the debt-to-income ratio to be even lower than that; they will want it to be no more than 28 percent of your monthly gross income.
A second major thing you will want to consider are the refinancing costs. For many people, the refinancing will cost between 3 percent and 5 percent of the loan amount; however, you can find some brokers who charge much less than that, perhaps even ½ percent of the loan amount. If you do not have enough to cover the costs, some lenders will allow you to move the costs into the principal of the loan so you can pay it when you do have the money. Some lenders allow you to not pay any closing costs but in exchange for a slightly higher mortgage rate.
A third thing to consider is the rate vs. term. It is important to focus on the rate but the term is equally important and can raise or lower the rate. If you want a nice, low monthly payment, then you will want to have a longer loan term. If you want a lower rate, then go for a shorter term. If you want to pay off your mortgage rather quickly, then go for the shortest loan term you can find and can afford.
If you have any questions, the contact TrueFi, we are an online mortgage broker firm. We can handle questions from anyone regarding refinancing.
There are a lot of things to consider when you are looking at mortgages, especially when you are looking to refinance your current mortgage or refinance to get a new mortgage altogether. However, there are some things you should really consider that many people overlook when they are doing their searches and research.
One of the major things to look at is your debt-to-income ratio. This used to not be such a big deal when considering refinancing your mortgage because banks put less emphasis on this; however, in case you have not heard, there were some major rules set in place for mortgages at the start of 2014 that affect both purchase mortgages and refinanced mortgages. One of the big points in these new rules stated that your new debt-to-income ratio cannot exceed 43 percent. This means that your total monthly debts cannot be more than 43% of your monthly income. This means that you will have to do some work to make your debts lower if your mortgage refinance sets you above 43 percent. Some lenders will want the debt-to-income ratio to be even lower than that; they will want it to be no more than 28 percent of your monthly gross income.
A second major thing you will want to consider are the refinancing costs. For many people, the refinancing will cost between 3 percent and 5 percent of the loan amount; however, you can find some brokers who charge much less than that, perhaps even ½ percent of the loan amount. If you do not have enough to cover the costs, some lenders will allow you to move the costs into the principal of the loan so you can pay it when you do have the money. Some lenders allow you to not pay any closing costs but in exchange for a slightly higher mortgage rate.
A third thing to consider is the rate vs. term. It is important to focus on the rate but the term is equally important and can raise or lower the rate. If you want a nice, low monthly payment, then you will want to have a longer loan term. If you want a lower rate, then go for a shorter term. If you want to pay off your mortgage rather quickly, then go for the shortest loan term you can find and can afford.
If you have any questions, the contact TrueFi, we are an online mortgage broker firm. We can handle questions from anyone regarding refinancing.
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