If you recently experienced some financial problems and are now slightly behind on your bills, you might be considering refinancing your home loan to help you get caught up. Refinancing is a good way to get caught up on your bills if you are a little behind, but there are several important things you should consider before you decide to proceed with this.
Your credit score
The first thing you should evaluate is your current credit score. One of the main factors that can affect your ability to get a loan is your credit score. Lenders are leery of offering loans to people with low or even okay credit. Most lenders have standards with credit scores, and they will typically only approve loans for people who have proved they are creditworthy. Therefore, before you apply for a new loan, find out if your credit score is high enough for this.
The current interest rates
The next thing to look into is the interest rates on loans at this time. Interest rates fluctuate, and you should avoid refinancing if you will end up with a higher interest rate than what you currently have. Not only do interest rates fluctuate from current market conditions, but the interest rate a lender offers you will also depend on your credit score. Because of this, you should evaluate both your credit score and interest rates together, as they are closely related in many ways.
How long you plan on staying in the home
Finally, you should think about your future plans for this home. Is this where you plan on living for many years, or were you thinking about moving to a different house? Refinancing a home loan is not free. It will cost money in terms of closing costs, and this can often add up to thousands of dollars.
You may want to ask a lender how much the closing costs would be before deciding if you should proceed with this. After finding that out, you should carefully analyze how long you would need to stay living in the home to at least break even with the costs you would pay if you refinanced the house loan.
After considering and evaluating these three things, you may want to contact a loan officer at a bank to find out if you can refinance your house. To learn more about this, contact a company like Liberty Escrow Inc.