Recently I had a discussion with a friend who was looking to refinance her second mortgage in order to get a lower interest rate and pay her home loans off faster. It’s something she had been putting off for quite some time due to lack of time and a busy work schedule.
However now that she’s in the right frame of mind to take steps toward refinancing her second mortgage, it’s extremely important that she does her research in order to receive the mortgage that’s right for her.
The truth is, one thing that can hold us back from growing our wealth is an abundance of debt – and mortgages, or specifically second mortgages are a big part of this. While the amount of second mortgage debt matters, it’s often the interest rates and terms related to that second mortgage that can make the big difference in our financial health.
Of course, many people don’t like to think too much about their debt, but the truth is that refinancing a second mortgage can save many people a lot of money and help them to pay it off sooner. So here are some guidelines to follow when looking to refinance a second mortgage:
1. The first thing to do before visiting any lenders it to shore up your bargaining position. Take a look at your credit report, and ensure to have any errors reported and corrected. Also, try to temporarily cut back on your spending in order to pad your savings account in order to pay for the closing costs associated with refinancing your second mortgage.
2. Start shopping. Don’t just go with your regular lender, but shop around and get at rates from five different lenders. Then, either pick the offer with the lowest interest and best terms, or use their offer as leverage in order to refinance your second mortgage with your preferred lender.
3. Ask questions before signing, not after. After finding the lender you prefer, make sure to ask all of your questions before signing anything. This includes information about what should happen if you miss or are late on a payment. This is also a good time to negotiate lower or waived closing costs associated with your second mortgage.