With all the chaos going on around us, it is nice to find a silver lining. With the recent announcement by the Federal Reserve that interest rates were slashed to near zero, consumers looking to finance or refinance a home may find a welcome bit of financial relief. This unprecedented and extraordinary measure is intended to help boost the economy and steady financial markets. With home loan lending rates already at near-historic low rates, this federal rate cut is expected to drop finance rates even lower and is a real opportunity if you are considering buying a home, or refinancing your home.
Since many State ECU members right now are concerned with cash flow, a refinance might make more sense than ever before. So let’s take a little closer look at the process and best practices.
What is a mortgage refinance?
Refinancing a home is the process of actually getting a new home loan—and can help pay off existing debts and put more cash in your pocket for essentials. The goal for anyone seeking to refinance their home loan is to end up with a better loan (lower interest rate) that helps achieve your financial goals.
Crunch the numbers
The real estate team at State ECU can help you determine if a refinance makes sense. By calculating your existing loan versus your potential new loan, plus adding in the cost of the refinance itself—we can help you understand how a new home loan may change your personal financial picture.
Benefits of a refinance home loan
The primary reason for a refinance home loan, especially right now, is to have a lower monthly loan payment so that you have more cash for essentials. And if you plan to stay in a home long enough to break even on the refinance costs, a lower interest rate and lower payment is ideal. Another consideration is that if your payments are substantially lower than your current rate, you may opt to shorter the loan period.
Know your credit score
Your credit score is always an important criteria for getting the best loan possible. So review your credit so you go into the process knowing your score. Review your credit reports and verify that there are no errors or surprises—getting corrections made can take several weeks.
And during this time, limit new borrowing—don’t open any new credit cards (or close any during this time), buy a car, or open any other types of loans.
Get documents ready
You will be asked to provide quite a bit of details about yourself and your finances (just as you did when you got your original home loan). You will need documents that verify your identity, your income, your assets, your current loan, and more.
State ECU Online Application—Getting Started
The application should take you about 20 minutes to complete. You will be asked questions about your personal finances and your home and current home loan. The real estate experts at State ECU will review your online request for approval. If your application is approved, they will ask you for a deposit to cover the cost of the appraisal on your home so that we can begin to process your refinance home loan.
Once your application is completed, a Real Estate Loan Analyst will contact you to provide help and guidance along the way.
State ECU understands that the novel coronavirus pandemic is causing uncertainty for members, and will continue to provide information to help members weather the storm. Our motto has always been, and will continue to be—even in uncertain times—that we are in this Together.