Refinancing your home mortgage sounds like a great plan on paper. But then, so do a lot of things. These days, getting one loan is a trial in and of itself, let alone getting a refinance to a new one. Depending on your situation, you may need all the financial stars to align for you to qualify for a refinance. So you need to be sure this is the right call before you get one. If you are considering getting a refinance for your mortgage loans in Knoxville, consider the following questions before deciding, as they will be instrumental to your choice.
#1. Is my credit score stable?
Your borrower credit score plays a vital role in whether or not you can lock down a decent mortgage rate. In actuality, if you want to secure any kind of mortgage, let alone a refinance, you’ll need to have a decent credit score. Mortgage rates are like a sliding scale, with the lowest and greatest rates going to people with higher credit scores (720 or higher) while those with the lower credit scores (below 620) will have a hard time getting any kind of mortgage, and can forget about getting a refinance.
#2. Is there equity in my home?
If you want to qualify for a new loan via refinancing, your home needs to have at least 20% equity, if you don’t want to pay private mortgage insurance. And if you do that, that added cost could end up canceling out the benefits of a refinance. This is the generally accepted rule, but there are exceptions. It is possible, technically, to qualify for a refinance even if your equity is under 20%, but it depends on the lender you’re talking to. The best way to find out if there’s a Fannie Mae or Freddie Mac program that will accept you is to simply go out to a lender and check.
If you need more information on refinancing before you decide, stop by a community bank in Knoxville to learn more about developing a relationship that can help you refinance your home today.