Mortgage rates remain near historic lows. If current refi rates are significantly lower than your current rate, or you want to lock into a fixed-rate loan, refinancing your mortgage can potentially save you thousands and give you a lower mortgage payment. Does the thought of refinancing seem overwhelming? Real estate agents in downtown San Diego suggest the following steps to lock into a lower rate.
1. Determine If Refinancing Is the Right Move
Don’t assume you will necessarily save money just because you can qualify for a new loan at a lower rate. Even “no-cost” refinancing comes with fees. This term usually just means the fees are rolled into the new loan, increasing your interest charges over time. You can use an online refinancing calculator to figure out if refinancing makes sense.
It’s also important to determine your goals to decide if refinancing is the right move. Do you want to take equity out with through cash-out refinancing or do you want to get a lower monthly payment? Are you trying to switch from an adjustable-rate loan to a fixed-rate mortgage? Consider your goals before you proceed.
2. Prepare Your Finances and Paperwork
You will need to submit the same paperwork for a refinance as you did for the original loan, so make sure you have updated information and documentation. It’s a good idea to take steps to improve your credit score as much as possible before applying to get the lowest possible interest rate.
3. Compare Rates and Apply
You do not need to refinance with your original lender. Get quotes from several lenders to potentially save thousands on fees and get the lowest interest rate. Once you’re ready, it’s time to submit your documentation for preapproval. Be sure you choose the loan type that’s best for your needs and goals. Compare the terms and fees and make sure you understand the real cost of refinancing your mortgage. For example, while you will get lower payments by refinancing into a new 30-year loan, you will end up paying more in interest and you will have many more years of mortgage payments.
4. Get an Appraisal
Finally, the lender will want to have your property appraised to make sure it is worth at least as much as the new loan amount. The appraisal is an important factor in getting approved, and you can expect to pay between $300 and $500.
If you’re thinking of tapping into your property’s equity to buy a second place, don’t hesitate to reach out to 92101 Urban Living. The downtown San Diego real estate scene is bursting at the seams with possibilities. Check out our current inventory of lofts and condos for sale in Little Italy, the Marina District, East Village, and Cortez Hill. You can also reach out by calling (619) 649-0368 today. ')}