Thinking of Refinancing? Resource One Offers Refinancing Options for Home, Auto, and Boat
Have you thought about refinancing your loans? If you have a mortgage or an auto or boat loan that you are making payments on each month, you might be able to save money by refinancing. At Resource One Credit Union, we regularly help our members refinance their loans and obtain more favorable terms. If you are interested in refinancing, keep these refinancing tips in mind to help you along the way.
- Refinance for the right reasons: There can be many reasons to refinance a home, auto, or boat loan. Probably the best reason—and the most common—is to get a lower interest rate on your loan. Lower interest rates mean you will end up paying less on your loan in the long run, which is always a good thing. You might also be aiming to shorten your loan term, or to switch your mortgage from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage (FRM)—or vice versa. In all cases, the “right reason” to refinance a loan is to obtain favorable terms. You want to be paying less each month, or to shorten the overall term of your loan, or both. As such, you will need to do a little homework to determine whether refinancing will actually save you much money.
- Monitor interest rates: If you are thinking about refinancing your mortgage, you should keep an eye on the interest rates that are currently available for home loans. As interest rates drop, the benefits of refinancing your mortgage grow. You might be able to get a lower interest rate and save a significant amount of money per month. Those savings, in turn, might give you the financial freedom to adjust your loan from a 30-year to a 15-year. Being aware of the interest rate landscape will help you figure out whether now is the right time to refinance. If and when rates drop, be ready to act quickly to submit your refinance application.
- Learn your current credit score: Your interest rate is going to depend on your credit score. If your credit score isn’t great, then it won’t matter how low rates are or how quickly you submit your refinance application. If you are thinking about refinancing, check your credit score first. If the score is in the low or medium ranges, take a few months and focus on increasing it. Paying your bills on time and staying well below the limits on your credit cards will help you improve your score quickly. Once your score is a bit higher, submit that application. Even if rates have gone up a bit in the two or three months you spent boosting your credit score, you will still probably get a better refinance offer thanks to your improved credit.
- Research your home’s current value: Another factor that matters for refinancing is equity. The more equity you have in your home, the better positioned you are to refinance your mortgage. In the wake of the last recession, many homeowners were “underwater” on their mortgages, which meant they owed more than the value of their homes. Their houses had declined in value while the amounts owed on their loans remained the same, resulting in negative equity. Right now, the market is a lot healthier, which means many homeowners have properties that have actually increased in value since the purchase date. Looking at online estimates for your home’s current value, or researching “comps”—homes nearby and of similar sizes that have recently sold—can give you a sense of where your equity stands.
- Use a payment calculator to see how much refinancing would save you: Many calculator tools around the web can help you estimate how much money you would save by refinancing a loan. Refinancing a loan—especially a mortgage—does involve fees and other expenses. As a result, it is crucial to weigh the prospective monthly savings of your refinanced loan against the upfront expenses of the refinance process. Using mortgage, boat, or auto loan refinancing calculators can help you execute this cost-benefit analysis.
Are you wondering how to save money with refinancing? At Resource One Credit Union, we dedicate ourselves to helping our members find a better financial situation. If you are interested in refinancing one or more of your loans, contact us today to learn about rates, terms, fees, and other refinancing details.