I supposed many of us applied for mortgages because we wanted to own a house for our family to live because it is not easy to purchase a very expensive property like this but with our patience and determination, we have a chance to reach our dreams. Pretty sure that the whole family, especially our children are so proud of us for providing them home because many families are still leasing and to have one only means that we are responsible parents. It would be great if both parents are employed because it would be more affordable to pay off the debt and manage all other obligations for the members of the family.

But pretty sure that even if only one of them is working, they can still manage to pay off the mortgage on time and that is if the income can be handled properly which means that even if a portion of this is used as repayment, the rest must be maximized. This is possible by avoiding unnecessary purchases because these are the only things that can break our budget and if you will let that happen, then you’ll be broke even before the paycheck arrives. I guess we just need to be more disciplined so that we can control the money that goes out of our pockets.

However, if we cannot manage it anymore, then we may have no choice but to refinance our mortgages and if you have not yet tried this, then check Dagensperspektiv.no – refinansiering guide as a reference. Pretty sure that you need to learn more about refinancing, especially the things that every borrower must take into consideration before sending out formal applications to various lenders. This might be a way to restructure your unpaid debts but you still need to look deeper into a few factors that could aid in a successful application.

Credit Score

Most lending companies are very strict when it comes to the credit score because this is one of the most important requirements in granting the request of the borrower. It would be great if you have higher ratings so that you can have more chances of approval. Aside from that, it is also of your advantage because with scores, you’ll be eligible for lower interest rates which I believe is a great factor to be considered when looking for deals.

However, some lending companies may not be looking at these ratings, especially when you are also applying for a refinance on the same firm where you applied for a mortgage. While other lenders will accept borrowers with lower ratings but the interest rates are higher. In my opinion, there is no sense to send formal applications when the rate is higher because your opportunity to save money can be ignored.

By the way, make sure to have a score greater than 760. Such ratings will help grant you your request.

Home Equity

It is very important to know the worth of your property because this detail is very important when refinancing a mortgage. So how much is the equity of your asset? For the refinance to make sense, this has to be worth more than your unpaid debt.

If the value of your home is lower then it is negative equity, so there is no point to refinance the mortgage. In this case, you have to improve or upgrade your house to raise the value. But if you are lacking in funds, then that would be the problem so you have to look for other alternatives that can help in your home upgrade.

To find out the equity of your home, know its current value. And then, subtract the outstanding balance on your mortgage. The difference would be the equity and this has to be at least 20 percent of your home. Anyway, lending companies have different ways of incorporating this so the considered percentage for equity of your home may vary – read more from https://www.investopedia.com/terms/h/homeequityloan.asp for added information.

Refinancing Cost

The monthly repayment costs of our mortgages could be high that’s why we think of refinancing this to lessen the burden and earn savings. So make sure that you can find the best deals where affordable rates and lower costs. If we can find one with reduced total costs, then it would be great, and keep in mind that most lenders applies 3 to 6 percent of your total loaned amount.

That’s why equity is important because you can use this as a refinance and cover the costs when closing an existing account. It would be nice if you can also negotiate with the lending company to reduce or cut down fees associated with this transaction.

Rates and Terms

As a borrower, you have to learn to set goals because this will help you with your decisions and weigh your options. Let’s assume that your goal is to find a lending company that offers the most affordable interest rate. In this case, you have to select the ones that can offer you the longest term so it could range from 25 to 30 years or more if allowed.

Now, if you would like to repay this for 10 to 15 years, then your monthly dues would be more expensive because the term is shorter but the interest rate is lower. But as an ordinary employee, ask yourself if you can afford to pay back on time and if your income would be enough so you better calculate your DTI ratio and equity as well. Shorter terms will be fine as long as you have sufficient funds to refinance the mortgage.

In my opinion, ordinary workers should choose longer terms even when you have to pay more. In this way, you can have better chances of saving and would have sufficient money for other obligations at home and your family. Anyway, try using online calculators to get an estimate.

Debt-to-income Ratio

Aside from the credit score that is usually raised, you also need to consider your DTI ratio because the lending firms will be stringent with this as well. DTI ratio refers to the gross monthly income percentage that goes to debt repayments so the lenders will use this in determining the borrower’s risk of borrowing. This has to be 36 percent or less, though some lenders make it to 43 percent so that you can qualify to refinance mortgages.

Let’s say that this ratio is also used in measuring the generated income of the borrower to ensure that he can pay off the borrowed amount. If your debt-to-income ratio is low, it means that your gross monthly income is sufficient so there is a high chance that lending companies will lend you funds.

To compute this, you have to add all your debts. And then, divide the sum by the monthly gross income. The result of this computation will be the percentage or ratio – look at this to try calculating.

Monthly Payments

After using an online calculator or asking quote from a lender, you’ll have an idea how much you are going to pay off every due date. This is a very big factor that could help you decide if you are going to submit a formal application or not.

You know how much you are earning as well as your usual expenditures. Therefore, you can figure out if it is time to refinance. If you think that this can at least solve some of your financial issues, then go for it.

Points

Do not forget to check the points required by the lending firm. This is 1 percent of the total loaned amount. You have to pay this to lower the interest rate that you will be paying every due date.

Sometimes this point is also paid when you are closing an existing amount. So make sure to know the conditions regarding this. It would be best to be aware of when it will be deducted and how much it would be.