If you want to get that interest rate down, as well as make repayments more manageable, then refinancing your jumbo loan can prove to be a great option. Since the general rule with jumbo loans is that of paying back over a long period, people who took the loan out many years ago have reasonable concerns regarding saving money. Of course, the amount that has been borrowed with a jumbo loan tends to be significant, hence specific rules need to be adhered to. By taking the time to think about the questions below, you will be in a position to make your way through the complex world of refinancing a jumbo loan, and survive the experience.
Firstly, you want to be informed on the best current rates for your circumstances, so before you talk with your current lender be sure to check out the rates other lenders are offering. Taking the time to carry out such a comparison will put you in a good position for understanding where your current lender is within the competition and ultimately where there is money to be saved. Bear in mind though, that refinancing with another lender will mean you will be liable for another set of fees, this means you should make contact with the lender you think is best and talk about your current financial circumstances, your plans to refinance and the costs that this will incur.
There is plenty that you can do to help yourself to get the best refinancing rate possible. For example, improving your credit score and analysing how you can improve your finances are quick and easy ways to get things looking positive. The lender you choose can assist you with this and it may result in a much lower interest rate for your refinancing plans.
Since your current lender will already be aware of your past payment history, your property and so forth, choosing to refinance with them is certainly a simpler option, however it may still be worthwhile to check out other lenders. Another benefit to refinancing with your current lender is that you are not likely to need a property appraisal, hence a way to save money. In addition, you may find that your current lender can provide a reduced rate without the need to take out a new loan, this may save on possible closing costs. The best option is simply to talk with your current lender about your refinancing plans and see what their best offer is.
Refinancing involves increasing the payment period for your loan, that is why it is crucial to know exactly how much of your loan you wish to refinance and the long term impact of this on your financial circumstances. If your planned retirement will take place in 10 years, analyse whether your pension will be sufficient to cover the costs of refinancing. Another example is if you plan to start a family in the near future and one of you may stop working or you will have childcare costs to pay. By making a long term life plan you will be able to decide whether now is the best time to refinance.
If you don’t want to take out a 30 year loan right now, then a hybrid adjustable rate mortgage may be an excellent way to lower the interest rate for your refinancing. Since this gives you a mortgage with a sense of freedom, it is especially appealing for people who plan to move house in the future. This type of loan begins as a low interest fixed loan for 10 years then it becomes adjustable. Granted this does mean that following the period of fixed rates your interest may increase, however if you may have a need to move or change your mortgage within the next few years, it can work very well. You should talk in detail with your broker or real estate agent before taking out a hybrid mortgage as the level of risk is certainly higher than other options.