There are many things you need to know before refinancing your home. Most importantly, you have to determine whether or not refinancing your mortgage will be beneficial for you.
Refinancing is the process of obtaining a new mortgage in an effort to reduce monthly payments, lower your interest rates, take cash out of your home for larger purchases, or change mortgage companies. Most people refinance when they have equity on their home, which is the difference between the amount owed to the mortgage company and the value of the home.
What are the documents needed for the refinance process?
- Proof of income (including pay-stubs)
- Tax returns and W-2's and/or 1099's
- Credit Report
- Statements of assets
What are some advantages of refinancing?
The main advantages of refinancing is of course the amount of equity you obtain, as well as a reduced interest rate. A lower interest rate can benefit your monthly payments greatly, potentially saving you hundreds of dollars a year.
Secondly, people often to choose to refinance to obtain the money for large purchases such as cars or reduce credit card debt. The way this is done is by refinancing for the purpose of taking the equity out of the home.
Refinancing is not for everyone either, however, consulting with your mortgage broker the steps to take to refinance will help guide you in the right direction.