With Kansas City mortgage rates so low at the moment, you may be asking yourself if you should refinance your jumbo loan. Refinancing a jumbo loan is a good idea if you plan to stay in your house for many years and want to reduce your interest rate.
Although the requirements for jumbo mortgages are different, the general process for refinancing is the same as it would be for a conventional refinance. There are a few factors you should consider before refinancing your jumbo mortgage:
- Your credit score
- When you will be selling your home
- Why you want to refinance
How Healthy is Your Credit Score?
Before you can even think about refinancing your jumbo loan, you must know the condition of your credit. Much like applying for a loan, your credit history and income will be evaluated when you refinance. Since these types of loans are outside the conforming loan limit, approval and underwriting guidelines are more stringent.
Collection notices, late payments, and unpaid bills will all hurt your credit score and reduce or eliminate your chance of refinancing on your jumbo loan. If there are discrepancies or errors on your report, it’s important to get them fixed before attempting to start the refinancing process.
Will You Be Selling Your Home Soon?
If you plan to sell your home in the next few years, refinancing may not make sense. The costs associated with refinancing your Kansas City mortgage rate may outweigh the benefits and end up costing you more money than you save. You will have to pay fees to refinance, and it may take several months before you can recover those costs from your lower mortgage payments.
Why Do You Want to Refinance?
You need to ask yourself what you want to gain from refinancing. Maybe you want to lower your Kansas City mortgage rate so your monthly payments decrease, or shorten your loan’s term. Whatever your reasoning may be, you need to know your options before jumping into anything.