Your credit score is one of the biggest contributing factors in determining what interest rate you'll qualify for. Take a look at your credit report to make sure there aren't any errors. In addition, be sure to pay all your bills on time. You want to do everything you can to increase your credit score before going in to refinance your home loan at the Lake of the Ozarks.
2. Opening New Credit Accounts and Increasing Debt
One way to hurt your credit score and your chances at a good mortgage interest rate, is to open up new lines of credit. Doing so can lead to delays in the mortgage approval process and could even cause you to get rejected. Not only does this cause a change in your debt-to-income ratio, but every time you open a new credit account, your credit score drops.
3. Failing to Consider All Costs
While lowering your monthly payment or getting a better mortgage rate is your main goal when refinancing, it's important to consider all associated costs. Before jumping on what seems like a great deal, weigh the amount of time left on your current mortgage and the closing costs of the refinance. If you don't plan to stay in your house very long or you're close to paying it off, a refinance might not make sense financially. Be sure to look at the big picture.
Chances are, your home's value is not the same as it was when you first financed your house. Overestimating your property value is one of the easiest refinancing mistakes you can make. Talk to real estate agents in your area to see what homes similar to yours are going for these days. Having a realistic number in mind can help you avoid a costly financial mistake.
5. Financing Short-Term Expenses with a Long-Term Loan
With the rise in home prices, many homeowners are tapping into newfound equity to accomplish financial goals. While a cash-out refinance may seem like a great way to pay for that cruise you've been dreaming to take, it will cost you more for that trip. Before refinancing, think about the value you're getting. Homeowners may receive more value by investing in home improvements, a college education or a promising business venture. Make sure your refinance will yield good returns in the long-term.
6. Refinancing Too Often
With interest rates near all-time lows, it can be tempting for homeowners to refinance. However, like mentioned above, there's more to think about than just the interest rate. Frequent refinancing extends the mortgage term again and again. Sometimes the lowest possible payment is a priority for a homeowner with limited cash flow. However, a financially stable borrower should focus on lifetime savings. One strategy would be to refinance with a shorter term. You can also make additional principle payments to avoid extending the repayment time frame.
Talk to your Lake of the Ozarks mortgage professional if you are considering a home refinance. I'll discuss financing options, offer competitive interest rates and back it up with the first class service you deserve. Together, we can decide if refinancing your mortgage at the Lake of the Ozarks is the right decision for you!
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Senior Loan Officer
NMLS #: 493712
4655 B Osage Beach Parkway
Osage Beach, MO 65065
Cell: (573) 216-7258
**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.