Are you a home owner in Grand Rapids? If so, then you are already aware of the fact that Grand Rapids can be a wonderful place to live, work, and even raise a family. At the same time, you may find yourself understandably frustrated by your current mortgage. Perhaps you wish you had taken the time to shop around and better explore your mortgage options before you signed the paperwork on your current home loan. If this is the case, then you may very well be considering the option of applying for refinancing on your home mortgage. You are not alone; approximately 80% of paperwork submitted regarding home mortgages in the past three years was related to refinancing.
Before you decide to go through the often long and complicated process of applying for a refinance, there are some things that all Grand Rapids home owners ought to know.Refinancing is Not Free
Some home owners are under the mistaken assumption that refinancing a home mortgage is as simple as getting approved for a lower interest rate than the existing loan. However, it is actually a lot more complicated than this and also involves a lot of paperwork. Furthermore, there are fees associated with refinancing one’s home. These fees can end up costing anywhere between three and five percent of the total loan amount. Because of this, refinancing is not always worth the cost, so you will want to do your calculations carefully and weigh the costs versus the savings to ensure that it will be worth it for you.Times Have Changed
These days, banks and other lenders are more strict than ever when it comes to approving applicants for mortgages. Therefore, while it may have been possible for you to get approved for a decent interest rate on your mortgage when you originally bought your home ten years ago, that may not be the case today. The point of a refinance is to save you money by securing a new loan with a lower interest rate, but there is a chance that you the banks will not be as generous this time around. Most lenders look for a credit score of 720 or higher to be considered for the lowest rates, which means you may not even be able to get a lower interest rate than you have on your current loan unless you have excellent credit.While refinancing can be a great option for home buyers in certain situations, this is not always the case. For the reasons listed above, it is always best to do your research and calculations before making a decision.