There are a lot of reasons to refinance a mortgage, but everybody realizes that if the rates rise it is not the best time to do that. Is it really so?
Financial planners assure that the rates are still good for refinancing this year. Below you may find a short guide how to refinance successfully if the mortgage rates rise.
There is no need to panic. You can still can a chance to have an American dream home mortgage if you follow certain rules.
Do It Fast
It is good news that the rates will not become extremely high in the nearest future. However, they still have a tendency to rise. It means that it is time to make a move.
The rates are unlikely to be lower. If you are considering refinancing, it is better to do it now. Try to find the necessary information about the possible rates and act immediately in order not to regret you did not make it on time.
Be Ready to Catch the Moment
People usually apply for refinancing to do it while the rates are lower. Not everybody knows that it is also a good way to catch the moment when the rates fall. Submitting an application does not mean that the rate will be fixed. You can wait and observe the prices for a while.
If you do not have the opportunity to submit now, you can still do some preparation. Preparing documents and saving money for the fees require some time. The sooner you start getting ready, the better.
Take Care of Your Credit Score
Even if you react fast it still may not be successful in case your credit score is not great. It is important to satisfy the requirements. The credit score influences a lot the rate of the mortgage.
Fortunately, the credit score can be improved in a two or three month due to recent changes on the credit report. To make your credit score better it is necessary to pay the bills on time and remember to stay far from the credit limit.
You may also check if there are any errors in the credit report. The credit score may change a lot when refinancing your mortgage. Consider making it better before applying.
Do not forget that you may pay the points of the mortgage before the end of the loan. It is quite common to give money in advance to lower the interest rate. This action might be profitable only under certain circumstances.
The economists recommend paying points in case the market is unstable and changes constantly. It will help to buy down the rate. If the market is balanced and fixed, there is no sense in paying more. Consider waiting for the rates stabilizing in order not to spend more.
An adjustable-rate mortgage might be a good alternative to fixed loans. It is a good solution in case you are eager to pay less every month. You also will live in this house only for a certain period of time and plan to sell it. It should not be your choice if you would like to pay the loan faster and are not ready to deal with the rate rising.
The adjustable–rate mortgages have lower initial rates than fixed-rated ones. Having this type of mortgage also means watching the market and being ready for changes. Think through your plans for the house, the advantages and drawbacks of every mortgage type and decide what is better for you personally.
May 10, 2017