Why to Refi: Six Important Things to Know About Refinancing

September 3, 2021

For months, the 30-year fixed-rate mortgage average has hovered near record lows at around / just under 3%. While most understand why low rates mean it’s a smart time to consider refinancing, many will pass up the opportunity simply because they don’t understand the process or because they’re intimidated by it..

At a time when refinancing can result in substantial savings, it’s important that all homeowners understand the reasons for refinancing, the benefits associated with it, the steps involved, and the things they can do to expedite the process.  To help, we’ve compiled a list of the top six things to know about refinancing with the help of our expert team of residential lenders:
 
There are many reasons to refinance. A mortgage refinance can have a huge impact on your financial situation. It can help decrease monthly payments, consolidate debt, eliminate costly mortgage insurance, fund home improvements, and more.
 
Rates are at record lows – for now. The main reason homeowners refinance is to reduce their mortgage rates and save money on their payments. While rates continue to be some of the lowest we have ever seen, they are projected to increase – and it’s impossible to time the swing. So, it’s a really good idea to consult with a mortgage professional to review your options today. Don’t wait!

Make sure it’s worth the cost. Before moving ahead with a refinance, be sure to factor in the additional costs associated with it. All borrowers will be responsible for paying for the home appraisal, credit check, origination fees, and loan closing costs. Some could even face a penalty for paying off their current loan early. So be sure to consult with your CPA or financial advisor to make sure refinancing makes sense. Even if you wind up with a lower mortgage payment, if you do not plan on staying in your home long enough to break even after paying the additional costs, it might be best to pass.
 
You should always compare lenders. Choosing the right lender can make a big difference when it comes to the amount you’ll spend in both fees to obtain the loan and mortgage interest over the life of the loan. Just because a lender offers a lower rate doesn’t always mean it is the best option.  You still have to factor in closing costs, which vary from lender to lender, and additional fees that might make that lower rate less advantageous. Be sure to get your complete quote in writing before committing to a lender and look for one that provides great service and prompt, easy-to-understand answers to all of your questions.
 
There are things you can do ahead of time to ensure a smooth process. You can get a head start on the refinancing process by gathering documents you’ll need to verify your income, assets and financial history. Also, be sure to check your credit score because it can impact the rate that you qualify for. And be sure to postpone any large purchases until after closing.
 
The process is not as hard as you might think. From start to finish, refinancing involves shopping for the best savings, locking in a rate, going through the normal processes of underwriting, conducting an appraisal and closing. Be prepared to provide your lender the necessary paperwork on time to avoid delays and additional costs.  And don’t forget to ask your lender about available technology and tools that can make the entire process even easier, like our BayFirst mobile app.
 
Want to know more? BayFirst’s mortgage originators are experienced consultants, and they’re here to help borrowers navigate their homeownership financing throughout every phase of their journey. We offer competitive rates and expertise coupled with technology to make the mortgage lending process an easy, stress-free experience, too!


Get Started On Your Refinance Today!