For whatever reason, people may need to remortgage their homes at some point in their lives. Maybe you want to refinance at a lower interest rate since you are having trouble due to how your current mortgage is structured. Whatever the case, it is important to make sure you weigh your options carefully while making a decision. Here is a step by step guide you should follow to remortgage your house.
1. Examine the Terms of the Loan You Have Now
The first step to this process is to re-examine the terms of the loan you already have. Things you will need to know about your current loan include your current balance, interest rate, payment, and term. Determining exactly what you have to pay and what the exact terms are is important, because you will need to find a mortgage that is a better deal. If you can’t refinance in a way that saves you money, as opposed to the loan you have now, there is really no point to trying to remortgage.
You may also think you know the terms of your mortgage very well. You’re the one who chose it after all. However, going over it again closely can be very beneficial. For example, there may be a strong penalty somewhere in the terms of the contract for trying to get out of the mortgage early. Things like this are easy to forget decades later, so going back over the terms again is probably a wise idea.
2. Shop Around for a New Lender
Now it is of course time to try to find the best deal you can to refinance your home. You may want to start with your current lender. Since you are already giving them business, this will give you leverage in the negotiations since they are unlikely to want to lose a customer.
If the refinance options with your current lender still do not satisfy you, begin calling different banks and credit unions in your area. Ask to speak with the loan officer and inquire about the remortgage options they offer. If you are interested in what the loan officer tells you over the phone, set up an appointment for go over the remortgage options that financial institution can offer you more thoroughly.
You also have the option of finding information online. Most banks have websites that will list generic mortgage rates. To make a closer approximation, though, you’re credit score will probably need to be known. Find your credit score out for yourself at some point. However, you should keep in mind that running your credit history excessively while searching for lenders can actually be harmful to your credit.
3. Determine What Kind of Loan You Want
Once you have found a lender you are satisfied with, you must make the determination of what kind of loan you want to refinance with. One thing you may be looking to do with this refinancing is getting out of an adjustable rate mortgage, because the interest rate has become too high. If this is the case, you may want to refinance with a fifteen or thirty year mortgage with a lower and more stable interest rate.
You may also have a sudden need for cash. If this is the case, you will probably want a home equity line of credit. The equity of your home will act as the cash you receive from the loan.
4. Close the Loan
This is of course the final step of the process. It is also often one of the most stressful. After filling out all the paperwork, you will have to pay to close the loan. Paying the closing costs can be extremely expensive. Thankfully, this process will be over in about thirty minutes. After it’s finished, you will be able to go back to living your life again hopefully with a mortgage you can afford to pay off this time.