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The best practices of refinancing

Posted on Monday, August 8, 2016 at 7:21:56 PM

Various trends in the nation's financial system have led to historically low mortgage rates. Although applications for new mortgages have been hot and cold throughout the past several years, this summer has seen an immense increase in the number of refinancing applications. Homeowners who are looking to refinance their mortgages are going to be treated to a wealth of options, incredibly low rates and the opportunity to significantly reduce their monthly payments with the right program. 

At the same time, this process can be somewhat complex and filled with challenges, so knowing how to go about it the right way is key to ensure that the refinanced mortgage is indeed better than the original lien.

Necessary knowledge
ABC News recently listed some of the questions that homeowners who are looking to refinance their mortgages should know the answers to before going into the application process, beginning with the length of time the individuals intend on keeping their current homes. According to the news provider, a smart move might be to try to find a refinance program that allows the homeowner to reduce the term from 30 to 15 years, citing the commonly lower rates and the fact that these programs will be better-suited to those who intend on moving down the road. 

The news source also stated that the current condition of the home will play a major role, as those that are in need of significant repairs should likely work on those improvements before even attempting to restructure their mortgages. Considering the fact that a refinancing program will likely impact the amount of working budget the family has, they will need to first know where they stand with their current arrangements. 

Finally, ABC News urged homeowners to look at the trends taking place in their local areas with respect to home values. If they are rising, refinancing is likely a sound idea, but if they are contracting, applying might not be worth the trouble. 

Work with a local bank
Homeowners will likely enjoy a more specialized level of service when working with local, community banks compared to larger, national chains. From understanding the unique goals and needs of the customer to consulting them on the full range of financial implications following a mortgage refinancing approval, community banks can go the extra mile to ensure homeowners make the right decisions.