More FHA Refinance Loan Tips
July 13, 2023
What are the best and worst things to do when refinancing your mortgage? One of the best things you can do is start planning your loan early. Saving extra money for closing costs (instead of financing them) can help you get off to a good start with an FHA refi.
One of the very worst things you can do? Apply for a refinance loan without checking your credit reports first. You aren't ready to apply if you don’t know what the lender will see. But that is fairly basic Refinance 101-type advice. What about deeper issues?
Refinance When You Are Ready
You aren't ready to apply if you aren’t sure about your FICO scores. You aren’t ready if you are unsure which lender offers you the lowest interest rate.
If you have saved money, worked on your credit, and compared lenders for the best rates and terms, you are closer to ready than you might realize.
Refinance Carefully
Some finance blogs and mortgage websites note that approximately one in four American homeowners have enough home equity to apply for cash-out refinancing.
But if you want to refinance your home to manage short-term debt, you should reconsider. Any scenario that allows you to run up the same debts again later (credit card payoffs, for example) could become a debt trap if you use cash-out refinancing to pay off those bills.
Cash-out refinance loans may help get you out of debt, but only if you won’t find yourself right back in the hole, so to speak, with those same creditors later.
Run the Numbers
Ask your lenders (you want to shop around for the right lender) to lay out the total cost of a cash-out refinance so you can see how much the loan will cost you at that bank compared to others.
Who charges the lowest amount for giving you the refinance loan? Who charges the most? Are there any benefits to going with the more expensive lender?
That does make a difference for some, and you’ll want to know the answers to these questions before you decide which lender is right for you.
Don’t Assume
Some count themselves out of the loan approval process before a lender can look at their credit reports or FICO scores. Don’t assume you will not qualify for the loan, and don’t assume your lender won’t try to work with you if you have recently experienced some one-time financial troubles.
And finally, don’t assume you must use the same lender for your refinance loan as you did for the original purchase. You can shop around and refinance at another lender if you choose to do so.
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RELATED VIDEOS:
What Is an FHA Loan?
Using an FHA Loan Calculator
Meeting FHA Loan Guidelines Improves Your Chances
One of the very worst things you can do? Apply for a refinance loan without checking your credit reports first. You aren't ready to apply if you don’t know what the lender will see. But that is fairly basic Refinance 101-type advice. What about deeper issues?
Refinance When You Are Ready
You aren't ready to apply if you aren’t sure about your FICO scores. You aren’t ready if you are unsure which lender offers you the lowest interest rate.
If you have saved money, worked on your credit, and compared lenders for the best rates and terms, you are closer to ready than you might realize.
Refinance Carefully
Some finance blogs and mortgage websites note that approximately one in four American homeowners have enough home equity to apply for cash-out refinancing.
But if you want to refinance your home to manage short-term debt, you should reconsider. Any scenario that allows you to run up the same debts again later (credit card payoffs, for example) could become a debt trap if you use cash-out refinancing to pay off those bills.
Cash-out refinance loans may help get you out of debt, but only if you won’t find yourself right back in the hole, so to speak, with those same creditors later.
Run the Numbers
Ask your lenders (you want to shop around for the right lender) to lay out the total cost of a cash-out refinance so you can see how much the loan will cost you at that bank compared to others.
Who charges the lowest amount for giving you the refinance loan? Who charges the most? Are there any benefits to going with the more expensive lender?
That does make a difference for some, and you’ll want to know the answers to these questions before you decide which lender is right for you.
Don’t Assume
Some count themselves out of the loan approval process before a lender can look at their credit reports or FICO scores. Don’t assume you will not qualify for the loan, and don’t assume your lender won’t try to work with you if you have recently experienced some one-time financial troubles.
And finally, don’t assume you must use the same lender for your refinance loan as you did for the original purchase. You can shop around and refinance at another lender if you choose to do so.
------------------------------
RELATED VIDEOS:
What Is an FHA Loan?
Using an FHA Loan Calculator
Meeting FHA Loan Guidelines Improves Your Chances
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