6 Tips for Refinancing Your NJ Real Estate Home

What to consider prior to applying for a new NJ real estate loan

 

The Mortgage Bankers Association, an organization responsible for monitoring real estate financial institutions, predicted in 2009 that loan applications for mortgage refinancing would drop by more than 52% in 2010. This was based on an assumption that financial institutions would raise rates to avert inflation. However, rates have remained at all-time lows, largely due to financial instability on a global level, and current NJ real estate homeowners are questioning whether they can take advantage of the situation. It is important to remember that in order to qualify for rock-bottom rates, homeowners must be qualified. This means they must do their research and shop around for the best rates. If you are considering a loan refinance, below are some tips to help you decide when the best time is to refinance your home:

Determine the Costs

First and foremost, you should examine your loan and see whether it makes sense to refinance. The best thing to do is to speak with a mortgage representative to determine the rate in which your monthly payments would be reduced as well as the approximate time it would take to recoup closing costs on the new loan. Keep in mind that you will be responsible for paying loan origination fees and discount points. Also, keep in mind that you have already paid into the loan, and taking on a new loan could possibly add onto the years you will be paying for your home. In addition, if you plan to stay in your home for years, you might be able to shorten your loan while keeping the costs similar to what you are currently paying by refinancing.

Shop Around

If you ultimately determine that you would be a good candidate for a refinance, start looking for the best rates and lowest costs. Your current lender might be able to offer you better rates as well as reduced fees if you are in good standing. However, if this is not the case you should shop around for the best rate by researching as well as asking family and friends for recommendations. Avoid "no cost" refinancing, especially if you plan to hold onto the property. Essentially, "no cost" means the costs will be rolled into the mortgage, which means you will be paying interest on them over the life of the loan. Generally, it is best to pay the points initially for a lower rate and pay any fees with a check at closing.

Get Your Credit and Finances in Order

Start by obtaining a copy of your credit score from a reputable provider. Currently, if you have a 740 or above credit rating, you are in good enough shape to qualify for an NJ real estate loan. Otherwise, you will need to spend a few months improving your score before applying prior to applying for a loan. This includes pay off any credit card debts and car loans in addition to fixing any errors that may show up on your report.

Be Patient

Mortgage companies are keeping their loan officers under strict watch these days. Because of this conservative loan climate, it could take several months before you are approved for a mortgage refinance. Consumers Union recommends asking lenders to lock-in rates for at least 60 days or more. You will want to make sure the lock-in is free of charge to you and ask your loan officer if there are any other fees involved in doing so.

Prepare Yourself for a Decision

Mortgage refinancing is basically like buying your home all over again. You will have to endure some of the same steps in home purchasing such as having an appraisal performed, but this time around things may be different. According to NJ real estate experts, many lenders now require you to have at least 10% equity in your home. Check comparable sales in your neighborhood to help determine what your home may be worth in this NJ real estate market.

Exercise Your Rights, If Necessary

If you have an unsatisfactory closing that did not go the way in which it was planned, fortunately you have some recourse as the NJ real estate homeowner. If you sought to refinance your primary residence and have not done so with your current lender, legally you have 3 business days to cancel the deal, known as the Right of Rescission. For example, if you have found out that you are responsible for paying unexpected fees or felt negatively influenced by your loan officer in any way, you can notify the lender within this grace period and be entitled to a return of your fees within the following 20 days.

 

The real estate market is changing rapidly and expanding into new avenues almost daily. Sometimes it can be very difficult to find the answers you need on a specific topic or issue. In times like these, you need a real estate professional who will provide valuable information and trustworthy advice. For more information on NJ real estate, call us today or click here to be connected with one of our top real estate specialists.