Like other mortgage options, going for a mortgage refi in San Diego means hurdling some challenges to get the best deal. Navigating the home refinancing market can be complex, and a person new to the industry will likely find it overwhelming. But with the guidance of a mortgage professional, things will get a lot easier. In addition, knowing the following will make you a better-informed mortgage refinance client.
Know the equity of your home. Here’s the thing: it does not make sense to go for a mortgage refi in San Diego if you have “negative equity.” In other words, if your home is now worth less than it was when you started your mortgage, it defeats the purpose of refinancing. Knowing how much equity is in your home is a crucial deciding factor on whether or not to consider refinancing.
Know your debt-to-income ratio. In most cases, lenders want to keep the monthly housing payments under 28% of gross monthly income – seen as the threshold for your ability to manage the monthly payments. That is when the debt-to-income ratio comes into play. How does this math work? Adding up all your monthly debt payments and dividing them by your gross monthly income determines your DTI ratio.
Make sure you have a good credit score. As credit score is one key factor for loan approval, it is no surprise when an application fails because of a not-so-good credit score. There are even instances of denied applications despite a healthy credit score. The consensus is that lenders typically expect a credit score of 760 or higher to approve and give the lowest possible interest rates. Make sure your credit score is in good standing.
Understand the concept of the breakeven point. The breakeven point concept allows you to determine whether or not going for a refinance can work to your advantage. It is when you figure out whether or not your monthly savings (from mortgage refinance) can cover the costs. For instance, if refinancing can make you shell out USD 3000 and save USD 100 per month, it will take 30 months to recoup your costs. Therefore, refinancing may not make sense if you put your home up for sale within that period.
Online looking for an expert who can help you with mortgage refi in San Diego? Consider Homeplus Mortgage today.