First Thing

first thing

Moves to make before you refinance a mortgage

The average rate on a 30-year fixed-rate mortgage is currently at 7.085 percent. That’s fairly high. High enough that you might be considering refinancing. If you are thinking of making that move, here are some things to do right now.

Check Your Credit

One of the first things to do when considering refinancing is to check your credit score. This three-digit score goes a long way in determining what offers you’ll receive from lenders. The higher your score, the better offers. If you check your report and find that your score is low, make an effort to improve it before refinancing.

Do The Math

As Money notes, you want to make sure this refinance makes sense financially before doing anything. There are costs associated with a refinance — usually between two and five percent of the loan total. For a refinance to make sense, you want to be able to recoup those charges and save money on the new loan. You can use a refinancing calculator to see where your break-even point is — that’s the amount of time it will take for the savings of the new loan to pass its costs.

Shop Around

If you decide that the math adds up for you, shop around for the best mortgage rate offer. Don’t just go with the first one you see. You might want to first check with a bank or lender you’re already using. Often a lender will cut you a deal for using multiple products. However, be sure to check different types of lenders. Credit unions often offer lower mortgage rates than big banks. Once you find the best offer possible, sign on the dotted line and get to saving.

Chris O'Shea

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