https://youtu.be/wRb2qK0RkDU There is no set definition about what is considered pre-qualified and what is…
Should I Refinance My Home Loan? | NE Homeowner’s Guide
The answer as always is…It depends.
I am a local mortgage broker serving Omaha, Papillion, La Vista, Bellevue, and all of eastern Nebraska. If you have questions on the Omaha housing market I’m happy to have a conversation with you.
How long have you had your current mortgage?
If you have been in your house for 5+ years you may finally be paying into your principal on the loan. Almost all of your payment goes to interest at the start of your loan. As you pay it down more is going towards the principle. If you have been on your loan for many years starting a new loan might not make sense even with a lower rate.
A good option here might be to look at a shorter-term loan. The best alternative to a 30-year loan is going to a 15-year loan. This might increase your payment but could save you on interest over the life of the loan.
How long do you plan to be in your home?
Another thing to consider is how long you plan to be in your home. A refinance has a cost (there may be options to avoid cost so please reach out and we can discuss this in more detail) so if you think you might move in the next few years it might not be worth refinancing even with a lower rate. However, if you are in your “forever home” even a small drop in payment will be beneficial.
How much equity do you have in your home?
How much is your home worth? In Omaha, home values have gone up a good amount in the last few years. Having a decent amount of equity in your home can improve the terms of the new loan and open up programs that were not options when you first purchased your home.
What is your credit score?
The single biggest factor that determines the rate and terms of the loan is your credit score. If your credit score has increased since you purchased your home (this is likely if you have made on-time payments on your mortgage) you may get the benefit of both the lower rates and the improved scores with a refinance.
Other useful links
- How to improve your credit
- The 20% down rule on conventional
- What is Escrow?
- How is income calculated?
- Why your assets matter
- Mortgage Calculator
- Is Credit Karma accurate?
- FHA vs Conventional, which is better?
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