Refinancing your mortgage is a great way to save money, especially with current rates at all-time lows.  If you’re looking into refinancing, there are some things you definitely shouldn’t do if you’d like to move forward successfully in the refi process. Here are some tips:

Don’t Neglect Your Credit Score

Even though you’re already a homeowner, your FICO score will continue to play a huge role in all of your financial endeavors, and your refinance is definitely one of them.  As a general rule, scores in the mid-to-high 700s will secure the best mortgage rates available.  If your credit score goes down, the interest rate can rise significantly.  So if your score is less than stellar, you should begin improving your FICO score before refinancing your mortgage in order to obtain the best rates and financing.

Don’t Acquire More Credit During Your Refinance:      

 Don’t apply for a new credit card or finance another huge purchase during your application process.  The entire loan application process requires significant documentation with any new balances or debts, and in some cases, taking on new debt can halt your refinance entirely. Avoid that as much as you can.

Don’t Ignore Your Savings Account:

While the fees for getting a loan could be minimal, you may still be required to bring enough cash for other items (insurance and taxes), as well as interest on the loan from the date of closing to the end of the month. These items can easily add up to several thousand dollars and you’ll be required to document where you obtained the cash for closing. In most cases, a copy of your most recent bank statement along with an explanation of the source of any large deposit is required. As a result, it’s important to maintain sufficient savings to handle the closing costs—so keep saving.

Don’t Constantly Refinance:

It’s advantageous to jump on a low rate like the ones currently being offered.  However, it’s key to also remember that the most important thing is to put yourself in the best financial situation possible.  If you can, refinancing into a 15-year term can offer you a great way to pay off your mortgage in half the time at the current low costs Down the line, even if rates remain great, refinancing back into a 30-year mortgage adds a lot of time and interest to your mortgage. Before you know it, you’ll find yourself at the doorstep of retirement with a hefty mortgage still remaining on your home. Ask me questions and we’ll sit down and compare what loan situation is best for you.