Should I refinance my mortgage?

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The number of people refinancing mortgages skyrocketed in 2020. The increase began even before concerns about the COVID-19 pandemic. Various financial news outlets attribute the growth to plummeting interest rates. In March, Quicken Loans posted the highest production days in the history of the company and Better.com reported a 200% increase in loan applications.

You might ask if a mortgage refinance makes sense for you. Experts say it depends on your specific situation, financial goals, and mortgage details. Speaking with a qualified financial advisor can help you make a decision.

5 tips to start the conversation with your financial advisor

These 5 tips can help you kickstart a conversation with a financial advisor.

1. Know your goals

Homeowners refinance mortgages for any number of reasons. Some people seek to take advantage of better interest rates. Lower rates could mean saving hundreds or even thousands of dollars in interest payments over the course of your loan. Other shoppers want to free up cash from home equity or to transition from an adjustable-rate mortgage to a fixed-rate mortgage. Discuss your goals with your financial advisor to see what options make the most sense for your unique situation.

2. Consider the true cost of refinancing your mortgage

Always research the total cost of a loan before accepting an offer. Some lenders charge a variety of fees for the service of evaluating your loan application. Mortgage fees could include closing costs, title fees, appraisal fees, origination fees, flood certification fees, attorney fees, recording fees, and more. Do your research and meet with your financial advisor to discuss the details. A qualified advisor can help you understand the fine print.

3. Find your credit score

Your credit report might help you access better mortgage refinancing options. For example, if your credit score meaningfully improved since applying for your original mortgage, then you might qualify for lower interest rates or better loan terms. Or, if your report contains errors, then it might negatively impact your application. According to a study by the FTC, errors impact 1 in 5 people on at least one credit report. A qualified financial advisor can help you understand your credit report and how to challenge any errors.

You can request a free copy of your credit report from each of the 3 major reporting companies every 12 months. These companies are Equifax, Experian, and TransUnion. To get your copies, use the federally authorized website at AnnualCreditReport.com.

4. Shop for the best deal

You can shop for your best refinance offer the same way that you would shop for an original mortgage. Check offers from various financial institutions, mortgage companies, and mortgage brokers. See what loan programs they have available for you and remember to always ask about the total costs before making a decision. You may receive different types of offers based on your income, credit profile, and equity ownership in your home. Your financial advisor can help you select the one that makes the most sense for you.

5. Check if you qualify for government programs

Special government programs might help certain homeowners secure more affordable financing options. Fannie Mae, Freddie Mac, the FHA, and the VA all maintain special lending programs for qualifying applicants. Some programs only support customers with original mortgages from the same lender, so be certain to confirm before applying. Each offers a different set of options. Research the programs that interest you with help from your financial advisor to see if you may qualify.

Safely Finance may be able to help

Reading is the easy part. Things get hard when you start to apply what you learn. Growing your savings takes time, building smarter spending habits requires effort, and keeping tabs on it all can feel tedious.

Smarter finance decisions start at home - literally. Managing your housing costs frees cash to pay bills, buy groceries, and finance your day-to-day expenses. Safely Finance may be able to help.

Safely Finance helps tenants break up expensive moving costs into affordable payments. The application process is fast. You can check your offers without impacting your credit score. You can better manage your cash flow with a fixed monthly payment.