When it comes to refinancing a home mortgage in Washington state, there are a few very important things you will want to consider. Everyone talks about refinance mortgage rates and if you are thinking about refinancing your home mortgage, Refinance rates are something you should feel pretty comfortable with.
So what are refinance mortgage rates? Just like your home purchase, the refinance rate reflects the amount of money you will pay to take out and maintain a home loan over a given period expressed as a percentage. Whether your shopping for refinance rates in Seattle, Bellevue or the surrounding area you want the best rate available. There are lots of things you can do to help aid in your search for the best deal in Washington state. Here’s a list of 10 steps you can take to ensure you are prepared and ready when the time comes to refinance.
1. Identify Your Intentions.
The first thing you should consider before making any major financing decision is why you are doing it. It sounds simple, maybe even a “no-brainer” to save money right? When it comes down to it, there are lots of options when it comes to refinancing a home mortgage, and what may save money for one, may cost another. Just what is it you are trying to achieve? To look for an answer, ask yourself another question. How long do you plan to stay in your home? If you plan to sell your home any time soon, it doesn’t make much sense to refi.
Are you comfortable in your payments and trying to remove the PMI by refinancing your current mortgage and replacing it with a conventional one?
Did you purchase your home with an adjustable-rate mortgage and now want to convert to a fixed rate? Some may be looking to lower the rate on their current mortgage by converting to a 15-year loan.
What kind of loan do you need? When it comes to refinancing your mortgage rate there are many options here are a few.
Cash-Out Refi
A “cash-out” option occurs when a loan is refinanced for more than the amount of the existing loan providing the difference in funds for the homeowner.
Home Equity Loan
A Home Equity Loan is created when the borrower uses the home’s existing equity as security for the mortgage. The loan amount is determined by the value of the property. Borrowers generally use home equity loans to finance major home repairs, pay for college tuition, or other major expenses.
Streamline-Refi
A Streamline Refi applies to FHA mortgages and is a process that speeds up the mortgage approval by using some of the original paperwork.
2.Shop The Rates & Know What They Mean
When it comes to know current mortgage rates to get the best deal in Washington state, this may be the most important step. Once you know the kind of loan you are looking for, you must take the time to shop the rates. This is where it pays to do your due diligence. You could save thousands of dollars over the lifetime of your loan with this step.
Not to worry, you won’t hurt your credit by shopping for rates. Don’t forget, the most important figure to look at is the APR or annual percentage rate. The APR expresses all interest and fees over the lifetime of the loan reflected as a percentage.
3.Organize your Financial Documents
Once you’ve decided to refi, it’s time to dig out your financial documents and do a quick review to ensure your ducks are in a row. Some of the documentation you may be expected to provide could include;
- Pay stubs
- Tax Returns, 1099s and or W-2s
- Bank Statements
- Asset Statements
4. Take a Look at Your Credit Report and Check for Errors.
Hey, mistakes happen. However, when they do, it can be a real source of frustration, especially when you are trying to refinance mortgage rates to get the best deal. Take the opportunity to take a close look at your credit report for any inconsistencies so you can take steps to remedy them before the time comes to refinance. Some of the most common errors people find on their report include everything from balance to identity (fraud isn’t the only player here).
5. Take a Few E-Z Steps to Improve Your Credit Score
This one seems to illude people, but there are several simple things you can do to improve your credit score. The first thing to remember is really easy, Don’t stop using your credit cards. That’s right, one of the things that help to determine your credit score is the activity generated from your consumer credit purchases. Be careful though. You’ll want to keep your credit card balances below 25% of the total available to you.
6.Lower Your Debts & Increase your Home Equity
Take a look at your outstanding debts. Now is a good time to pay off any outstanding medical bills. Also, take the opportunity to pay down your credit cards. Start with higher interest cards first. If its an option for you, it never hurts to make payments directly to the principal amount of the home loan in addition to the monthly payment. Boosting curb appeal can also increase equity but be careful unless you’ve been planning for the upgrades, you will want to keep the price tag down while increasing the overall value of your home.
7. Compare Lenders
Every mortgage lender wants to sell you a mortgage. After all, it’s how they get paid. Take the time to compare several lenders. You need to find someone you feel you can trust. This person is representing your interest in a major business deal. Work with a licensed professional that’s accessible, and works to make sure the process is as easy and painless as it should be.
8. Take A Closer Look at “No Closing Costs”
We have all heard the advertisements for low or no closing cost home loans. Remember lenders don’t give money away for free. Many times what is represented as a no closing cost mortgage means the cost is spread over the life of the loan. Maybe a no closing cost refi is right for you, just make sure you understand all of the charges and take the time to compare it with other mortgages side by side.
9. Buy Discount Points
One great way to get a lower rate is literally to buy one up front. Each discount point lowers the overall interest rate by a fraction of a percentage point over the lifetime of the loan and is usually purchased for about 1% of the total purchase price. For example, If I purchased a home for $200,000 discount points would cost about $2,000 each.
10. Negotiate Closing Costs / This is Why We Shopped For Different Lenders.
This is where we come full circle. If you followed the steps we outlined so far, you are armed and ready to refinance your mortgage rate and negotiate the closing costs with your lender. The closing costs aren’t generally set in stone and a professional mortgage lender will always appreciate the opportunity to compete for your business.
Do you have more questions about refinancing your home In Washington state and the greater Seattle area? Let the mortgage professionals at Sammamish Mortgage guide you. Family owned and operated for more than 20 years, we know what you value. Let us help you understand the ins and outs of home financing and more. Sammamish Mortgage offers a variety of loan programs including FHA and VA mortgages. Regardless of your situation, we can guide you through the process. If you have questions about securing a mortgage in Colorado, or would like a rate quote, please contact our friendly staff. We look forward to serving you.
