Refinance 1st Home

BILL'S ANSWER

Whether or not you will be able to find a loan that will both allow you to tap into the equity in your current home and lower the monthly payments on your mortgage will depend on your credit score, the amount of equity in your home, and how long you have been paying on your current mortgage, along with numerous other factors. The most important point is that you shop around to find the loan with the lowest interest rate and best terms available. Speaking with numerous mortgage lenders and brokers will allow you to better judge your prospects as a borrower and will arm you with valuable information about what to expect during the refinance process.

If you want an introduction to pre-screened mortgage lenders, Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at: Mortgage Refinance Quote

First, your credit history is a major consideration when you are shopping for a new mortgage. A favorable credit score will increase your chances of finding a loan that will lower your monthly payments, since you will qualify for better interest rates than those available to people with credit problems. Currently, the average interest rate for a new 30 year fixed-rate loan is 6.4%, and the average FICO credit score is 723. So, if your credit score is better than 720, you should expect to qualify for an interest rate of around 6.5%, or possibly lower. However, if you have had credit problems in the past, you could be forced to pay a significantly higher interest rate, which could make your monthly payments much higher. For example, the monthly payment on a $100,000 30 year mortgage at 6.5% is approximately $630, plus insurance, taxes, etc. If the interest rate on the loan increases to 9.5%, the monthly payment increases to $840, an increase of over $200 per month. As you can see, your credit score, which is one of the major determinants of your interest rate, is extremely important when shopping for a new mortgage.

The amount of equity you have in your home, and the length of time you have been paying on your current mortgage will also be major considerations, since you are looking to pull money out of the home and lower your monthly payments. In order to lower your payments, you must either obtain a loan with a lower interest rate than your current mortgage, find a mortgage with a longer repayment term, or borrow less than the original balance of your current mortgage. For example, if you have $60,000 left to pay on a $100,000 mortgage, you could cash out $40,000 in equity and keep the same monthly payment as the old loan, assuming the interest rate and loan term remain the same. However, if the balance of your new mortgage will be more than that of your old mortgage, you must either find a lower interest rate or take a loan with a longer repayment term, if you want to keep your monthly payments the same.

As I mentioned before, you need to shop around with different lenders and brokers to find the loan that best suits your needs. I encourage you to start your search by visiting the Bills.com Home Refinance Resources page, where you will find a wealth of information about home refinance programs. If you enter your contact information in the Bills.com Savings Center at the top of the page, we can have several pre-screened mortgage brokers contact you to discuss the options available to you.

I wish you the best of luck in your search for a refinance loan. I hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.bills.com/