With mortgage interest rates near all-time lows, many Peoria homeowners are considering refinancing right now. Are you a viable candidate?
Refinancing simply means that you are getting a new mortgage to replace your existing home loan. There are many reasons why you may want to refinance your mortgage, but the most common is when mortgage interest rates have dropped. You can significantly reduce your monthly payments by refinancing to a new mortgage with a lower interest rate. A good rule of thumb is to start thinking about refinancing when interest rates have fallen by at least a half percentage point from what you are already paying.
What's in this article?
Once you decide that now is a good time to consider home refinancing in Peoria, Illinois, you should keep a few things in mind as you go through the process…
Know Your Home’s Equity
Before you take out another mortgage, you should figure out just how much equity you have in your house. You can do this by deducting the remaining loan balance from the current value of your home. There are many ways to calculate the current value of your home, but the easiest is to use value estimators provided by licensed mortgage lenders or a real estate marketplace such as Zillow. Typically, all you have to do is type in your home address, and the estimator will provide you with a rough estimate of how much your home is worth based on comps or comparable sales. While some mortgage lenders will allow you to refinance your home with as little as 5% equity, you will likely get a lower interest rate if you have 20% or more equity.
Ready To Take Your Next Step?
Improve Your Credit Score
When preparing to refinance your Peoria, Illinois home, it might be a good idea to take the time to raise your credit score. After all, the higher your credit score, the lower the interest rate you are offered. If you are thinking about refinancing your home to lower your interest rates, you might as well spend a few months working to improve your credit score and get the best rate possible. Putting in the work to do so could save you thousands of dollars in interest over the term of your mortgage.
Costs to Consider
Many of the fees associated with refinancing your home in Peoria, IL, are the same as those associated with your original mortgage — e.g., loan origination fees, application fees, appraisal fees, attorney fees, title search and insurance, taxes, and other fees. Some lenders will charge these fees upfront, while others will roll them into the remaining mortgage balance or adjust the interest rate to compensate. The total amount of the fees, how much you save on the monthly payments by refinancing, and how long you plan to live in your home all play a role in deciding whether it makes sense to pay these fees to refinance your home.
Are You Looking for a Mortgage Refinancing Company in Peoria, Illinois?
Before you decide to refinance your home in Peoria, Illinois, it’s important that you have a well-thought-out plan. First, you should consider how long you intend to live in your home. If you plan to move within the next few years, you should halt the process now, because the expense of refinancing would most definitely outweigh the value. From there, you can delve further into the numbers to see if refinancing would be beneficial.
If you are looking for a reputable and licensed mortgage refinancing company in Peoria, Illinois, you can count on us. Call Compass Mortgage at (877) 793-9362 or contact us online to learn more about how we can help you make wise and informed choices regarding your mortgage refinancing.