How To Refinance Second Mortgage
Refinance Second Mortgage Techniques
Especially now, homeowners with a second mortgage may want to consider refinancing. Although it isnt necessarily a good financial move for everyone, the decision to refinance can be immensely beneficial to those who carefully assess their individual situations and needs and come to the conclusion that it will work to their advantage. The decision to refinance should mostly depend on how much your home is worth, how much you owe on it, and whether or not you plan on staying in it for a significant period of time. You should also consider the costs of the refinance, the underlying reasons for it, and the type of loan terms. If youre wondering to yourself whether it would be a good idea to refinance your second mortgage, the following are all good reasons to go through with it:
1. To do away with private mortgage insurance, which is often unnecessary and expensive
2. To get a better interest rate
3. To lower your monthly payments
4. To combine your first and second mortgages into one loan and one convenient payment
5. To match your current loan term with your current financial circumstances
6. To take advantage of cash-out refinancing and receive cash back at closing
Keep in mind that once the paperwork is completed, you may not be able to cancel, so make sure you are confident in your decision before you sign anything.
How to Go About Refinancing a Second Mortgage
If you end up deciding that refinancing your second mortgage would be a smart idea, but dont exactly know how to go about the process, the following step-by-step instructions should help you get started:
1. Crunch some numbers yourself or use one of the many mortgage calculators that can be found online to determine whether or not refinancing is the best decision for you.
2. Ensure that youre in a good financial position. Start by pulling your credit report, and once you look it over, dispute any mistakes you may find right away. If you find any negative information in your report that may be bringing down your credit score, try your best to get it resolved. Then, make sure to add money to your savings account. Since you will probably face closing costs associated with the refinance, you will want to show to your lender that you have adequate funds to cover the charges.
3. Find several different lenders who can provide information on how to refinance a second mortgage using one of their programs. Compare rate information, loan terms, and lending fees, and decide which lender best suits your needs and meets your desired terms. Its best to not settle with the first loan offer you receive. Shop around and compare, and dont move on until you find a lender with whom youre comfortable and confident.
4. Its possible that some of fees associated with the refinance, like the appraisal and title fees, may be able to be waived, so try to negotiate with your lender.
5. Look over all the paperwork carefully, decide how much money, if any, you will need to cover closing costs, and make sure to ask any questions you may have.
6. Before you sign the paperwork, carefully review all the terms of the refinance one more time. Be sure to know if you will be able to make the required payments, and know what will happen if you cant for any reason. Once everything checks out and youre satisfied with the agreement, go ahead and sign and start enjoying the benefits of your refinance!
by: Brent M. Barnhart
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