The goal with refinancing your existing mortgage is to obtain a better loan with better terms or lower interest rates.
With spring in the air your thoughts may be turning to making some renovations on your home, or installing that pool the kids have been asking for. If you are considering tapping into your homes equity to fund the project, now is a good time for St. Louis home owners.
The goal with refinancing your existing mortgage is to obtain a better loan with better terms or lower interest rates. As of March 22nd, interest rates in St. Louis for 30 year fixed rate loans and 15 year fixed rate loans have dropped. If the interest rate on your current loan is at 5% or more, then you will benefit by refinancing to the current 4.45%.
Check Your Current Mortgage and Credit
Now before you run out and start buying floaties, check the state of your current mortgage. Is it in good standing? Make sure you know what the terms are and what the exact interest rate is. Some mortgages include a penalty if you pay them off prematurely, so check the fine print on your mortgage loan payment to see if that would apply in your case.
It is recommended that you try and clean up your credit before applying for a refinance mortgage. If you can manage to pay down some of your existing debt you stand a better chance of getting approved for a new loan. Also consider working with a St. Louis mortgage broker to help you with the paperwork. They deal with lenders all of the time and will know how to make your application look more appealing to them.
Cash-Out Refinance
The type of refinance you are looking for is what is known as a cash-out refinance, and one of the more difficult loans to receive approval for unless your home has dramatically increased in value since your closing of the original mortgage. Otherwise, you are taking out a new mortgage on the house that is more than what you owe on the original, and taking the difference as cash. Expect that the interest rate offered may be slightly higher than the prime being offered in St. Louis at the time since the lender is assuming a bigger risk.
There are two things you can do with the cash you get out of your new mortgage that will be beneficial in the long run. You could use the money to consolidate high interest credit card debt, thus freeing up more cash for your monthly budget. You should then try and take at least a portion of that extra money and apply it to your mortgage payment each month. With the lower interest rate you will find that bringing down the new balance on your mortgage is much easier than paying off the credit card would have been.
If the cash out mortgage is for home improvements, make sure they are ones that will increase the value of the home. Many St. Louis homeowners will assume a new mortgage of this type if they know that they will be selling the house in the not so distant future and would like to increase its value and selling appeal before-hand. If you make the right renovations and additions you could substantially increase the value, and thus your profit, before putting the home on the market. That pool you are considering will give you a few years of backyard fun, and then may be a great selling feature when it comes time to market the home.
Contact Sean Z Mortgage
Every St. Louis resident deserves the opportunity to live in the home of their dreams. Let Sean Z and his team help you secure the funding to make that possible. Call us today at (314) 361-997 or fill out our instant contact form.
photo credit via Flickr.com: 401(K) 2013