- Finish any home improvement projects.
- Don't take a long vacation.
- Lock your rate.
- Value your home realistically.
Four Things to Avoid if You Plan to Refinance
There are many consumers interested in refinancing. Some have taken advantage, but a lot of homeowners are on the fence about whether they can get a good deal when considering closing costs and so much more information required by many lenders. If you are sitting on the refinance fence, here are a few things that can ruin your chances even before you start:
Finishing the Fixes!
If you are thinking of refinancing, it is time to finish up all those home improvement projects that are half done. A ripped out sink in the basement bathroom or exposed wall will cause your appraisal to be lower than it should be. Finishing these projects and not starting new ones is important if you want to get the most out of your refinance.
Estimate Your Home’s Value Realistically
Even in today’s market, homeowners may assume that their home has not depreciated as much as it actually has. This may lead to confusion and frustration for consumers and lenders alike. Go to the online home value Web sites, such as Zillow, to learn how the sales prices of comparable homes in your neighborhood. Ignore the tax appraiser's value of your home for refinance or market value purposes.
No Long Vacations!
If you are thinking about a refinance, don’t plan a long vacation. Extended time without communication with your lender could lead to a failed application. It is usually best to wait until after your refinance has closed to head out for a vacation longer than a weekend.
Lock Your Rate!
If you are thinking of applying for a refinance soon, you should think about getting a rate lock. If you let your interest rate float instead, there is always a chance that increased rates could leave you saving thousands less than you might have. A rate lock ensures you get what you paid for.
If you have questions about these mortgage options or how to fund your home improvements, send a question to Bill, the Bills.com resident expert.