Dos and Don’ts for a Home Mortgage Refinance, Part 1

dos home mortgage refinance

If you’re currently paying off a mortgage loan for your home, there may be a few different reasons you’re considering a mortgage refinance. Many do this to achieve a lower payment or more favorable loan terms, while others look to take advantage of their equity in some way during a refinance period, including improving struggling finances.

At Wallkill Valley Federal Savings and Loan, we’re here to help with numerous mortgage loan areas, including refinancing options for those considering this. Not only will we provide several great loan options here, our loan officers will sit down with you and help you go over all the relevant factors that determine whether refinancing is right for you. The world of mortgage refinancing is rife with “dos” and “don’ts” that will help you properly navigate this process – this two-part blog will go over several to keep in mind as you’re going down this road, starting with the DO section here.

Investigate and Improve Credit

Like with any standard home mortgage situation, credit score and history will be vital factors as you apply for a refinancing loan. A refinance really just refers to replacing your current mortgage with a different one that has different terms, but if your credit is too poor, you will not qualify for these alternative mortgages to begin with.

Start by checking your credit score, plus confirming it’s accurate based on your credit history, which you can check it against. If you find it’s too low for the kinds of loans you’re targeting, which our loan officers will help you understand, there are several steps you can take to raising it, from consolidating debt to making larger payments and more.

Lower DTI

Down similar lines, one of the key factors in any mortgage application, refinance or otherwise, will be your debt-to-income ratio, or DTI. This is a monthly figure that expresses how much of your overall gross income goes toward paying debts – if it’s over 40% or even close to this point, you could be at risk of being denied your refinance approval. If your DTI is high, work with a debt specialist on how to decrease it.

Make Comparisons

It’s important to make comparisons during this process, and we mean this in more than one way. Firstly, you should be considering multiple loan options and their qualities, from interest rates to repayment periods, and comparing them to find which is best.

Secondly, however, you should also be comparing any loans you’re considering to your current loan. Just because you’ve been approved for a refinance doesn’t necessarily mean the rates you’ve been approved for will be an upgrade on your current situation.

For more on areas to promote and areas to steer clear of during a mortgage refinance search, or to learn about any of our car loans, personal loans, savings accounts and more, speak to the staff at Wallkill Valley Federal Savings and Loan today.