McLEAN, Va. (7/28/15)--You might be one of roughly 6.5 million Americans who could benefit from refinancing your home according to the Mortgage Monitor Report from Black Knight Financial Services (USA Today July 12).
Based on data from May, about 3 million borrowers could save at least $200 a month by refinancing. By refinancing and locking in a better rate on your loan, you could reduce your monthly payment and save thousands of dollars in interest on the life of your mortgage. A lower interest rate also could allow you to build equity in your home more quickly.
If you're considering refinancing, your lender will run a copy of your credit report. Other items you will need include:
When you refinance, you close your existing mortgage and create a new one. The approval process to refinance is similar to the process of obtaining your original loan. The specialists at your credit union will consider your income and debt, credit score, and other factors affecting your financial situation.
Your new interest rate will be based primarily on your down payment and credit score. When considering a refinance, you also want to understand your break-even point: Weigh the costs of refinancing against how much you’ll save each month to know when you will recoup costs over the length of your new loan.
For related information, read “What Newbie Home Buyers Need to Know” in the Home & Family Finance Resource Center.