2012 has ended and a new year has began. People like to create New Years resolutions and hopefully stick with them. It seems that more and more new years resolutions revolve around saving money, adding more to the IRA or 401K, paying off debt(s) and becoming more financially secure. Makes sense especially after our country went through a huge economic down turn at the end of 2007 that we are still feeling the effects. There is one New Years resolution you can get out of the way in January that not only will help you lower you bills but make you more financially secure. What is it you ask? Refinancing your Northern Virginia home….your largest asset. The process is not difficult…lets walk through how to get started to lower monthly expenses:
As you may be aware mortgage interest rates have continued to fall ever so sharply over the last 24 months. So much so that they are now around 3.34% (at time of written blog). If you look at interest rates in 1997, getting a mortgage under 7.5% was a great deal. Looking back at that, today’s rates are the best in history. This means that money is very cheap and you should take full advantage.
The first thing you need to think about when refinancing is…”what are you long term goals for staying in you home AND what is my motivation for the refinance? Cheaper payment? Skip a Mortgage Payment? Free up monthly money to pay off other debts? Figure out your motivation.
2. Credit Score
This plays a large factor in qualifying for the loan and what your new interest rate will be. Lower your credit score, more of a risk you appear to be for the company lending you the money? Makes sense to me. You can do 2 things to get a round about idea of your credit score ahead of time. You can go to www.creditkarma.com and sign up for an account and it will provide you your credit score and full credit information. You can also go online to www.freecreditreport.com and do the same thing. The drawbacks is that it will only pull from 1 of the 3 credit bureaus. Lenders typically take your middle scorewhen pulling your credit and use that as your main score. So get an idea on your credit to know if there are any mistakes, late payments, and what your credit score might be.
3. Find a Respectable Mortgage Lender:
This may sound obvious but you would be surprised. Just as not all attorneys, plumbers, AC Guys, Roofers, etc, not all mortgage lenders are the same. Look for a mortgage lender that has a good reputation, can close your loan in a respectable amount of time that meets your needs, and is competitive with interest rates. Just because a lender offers you the lowest rate you can find, DOES NOT necessarily mean that is WHO you should be working with. A mortgage loan officer that is responsive, educates you on the process, and can close your loan on time is worth paying an 1/8 more on the interest rate(in my opinion). There are many good mortgage loan officers out there, ask a friend you trust, google online, or just make some calls. It is worth your time to make an informed decision.
In 2013, NOW is the time to take control of your financial future. The first step is by protecting your largest asset…you home. Take a look at the three steps I outlined above and do your homework. In the future, as the economy and markets continue to improve that usually means interest rates will be rising. Take action NOW and make refinancing the one New Years resolution you can get out of the way in January.
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