Tips & Warnings Before You Refinance

• It helps to know what homes similar to yours have sold for recently. A quick phone call to the Realtor who sold you your home can answer this question for you.
• Before refinancing, have a clear picture of how many years you plan on living in your current home. This information will help your lender in recommending the best mortgage products for your refinance.
• As a general rule, lenders prefer you to have at least 5% equity in your home in order to refinance. Lenders do vary, but banks are hesitant to lend over 95% of a home's or property's market value due to risk of default.
• Do you really need to take money out of your equity? Keep in mind that this will usually cause an increase to your new rate, as it increases your loan-to-value (LTV). For the lowest payment possible, you should only refinance your existing mortgage balance.
• Always feel free to ask you lender for a clear explanation of all of the fees your will incur through the refinance process. You may find it is more cost-effective to stay in your current mortgage!