Home Refinance Loan Checklist: Plan Now and Save More Roger Odoardi What to Consider When Looking at Home Refinance Loans Have you been thinking about home refinance loans? It can be challenging rounding up all the factors that go into making an important decision like refinancing your home. Using a checklist is one of the best ways to get organized—home refinance loans are no different. Here’s a straightforward checklist with the key questions you should ask before choosing a home refinance loan: How long do you plan to stay in the home? There are expenses associated with any home refinance loan, which include various application and lenders’ fees, title insurance, and more. You will end up with lower monthly payments, but in order to benefit from these you have to stay in your home for long enough that your new monthly savings add up to more than what you’ve just spent on refinancing costs. What is the interest rate on your current mortgage? One big reason homeowners choose a home refinance loan is to lower their interest rate. This will result in thousands fewer dollars being paid over the life of the loan, and a lower rate can lower your monthly payments and/or shorten the life of your loan. Are your personal finances in good shape? New regulations require that lenders carefully verify your ability to pay back any home refinance loans. You will need bank statements, paycheck and investment records, tax returns, and a personal monthly budget that shows no more than about 40 percent of your income being spent on all debts—including mortgage and property tax. Your credit score needs to be respectable as well. Plan to have all of these ready before you apply for a home refinance loan. Are you currently paying private mortgage insurance (PMI) premiums? A home refinance loan may allow you to drop this insurance, which can significantly lower your monthly payments and make the refinance even more profitable. It’s important to speak with your current and future home refinance loan providers about mortgage insurance, because the fine print can result in big out-of-pocket differences. Does your current mortgage have any prepayment penalty? If it does, you have to add that figure to the other costs of refinancing and make sure that you’ll still come out ahead in the end. Is your current mortgage held by Fannie Mae or Freddie Mac? If you received a government loan to buy your house, you may qualify for the Home Affordable Modification Program. More information is available on this federal website. Do you have any money to invest right now? If you’re taking out a home refinance loan because you need cash for other purposes, then this question doesn’t apply. However, if you’re simply swapping one mortgage loan for another, you may benefit from paying “discount points,” which lower the interest rate for the life of your loan. The expert loan officers at Blue Water Mortgage will guide you through a step-by-step evaluation of whether you can benefit from a home refinance loan. Contact us today to get started. Roger Odoardi Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.