Adulthood has taught me many things, like the importance of good friends, good health, and great credit. Since I am always looking for ways to save money, I decided to investigate my options in real estate. My husband and I bought our first house together in November of 2014 when interest rates were slightly higher and we were just starting our new jobs in Las Vegas. Fast forward one year later, we are now in the position to refinance our home to a lower interest rate, get rid of our private mortgage insurance (PMI), and cut our mortgage down from a 30 year to a 15 year mortgage. Saving money is on our house means more vacations to Harry Potter World….and other fabulous places!Refinancing to a 15 year fixed mortgage can save you thousands of dollars in interest. For us, it will save us over 80k in interest and our house will be paid off in 15 years! Although our payment will be higher, more of our money will be going towards the principal of our loan. Here are the steps you should take if you are looking to refinance to a 15 year mortgage.
How to Refinance to a 15 Year Mortgage
1. Don’t Take Out Credit
Before you have a lender pull your credit make sure you have not gotten any new credit cards, car loans, or personal loans in the last three months. This could hurt your credit and hinder you from qualifying for the best 15 year mortgage rates available.
2. Gather Information on Your Current Mortgage
You will need to know how much you owe on your current mortgage, how much your annual taxes are on you house, and how much you pay for home insurance each month.
3. Shop Around for The Best 15 Year Fixed Mortgage
Once your credit has been checked by the first lender, you can have it pulled by others for the next 14 days without it hurting your score. Get at least three different quotes for your 15 year mortgage so you can see all of your options and pick the best option possible. We ended up using Quicken Loans and we were extremely happy with their service and it cost us little to nothing to refinance.
4. Know What Your Paying For
When your looking for a mortgage, there are three things to consider: interest rates, fees, and hidden costs. You want the lowest interest rate available without having to pay any “points” or “discount fees”. A lot of lenders will offer lower rates if you buy them down, but this is typically not the smartest decision. Most lenders charge fees for refinancing and wrap up all of those fees into the new mortgage amount. Make sure to have every cost and third party fee broken down. Also make sure to ask about closing costs, title insurance fees, and other fees that are not always in the original rate quote.
5.Don’t Lock In A Rate Until Your 100%
After you’ve gotten full estimates from three different lenders, you will want to look at all of your options and choose the best one before locking in your 15 year fixed interest rate and moving forward with your refinance.
I am so happy we made the decision to refinance and learned a lot in the process. I know this topic isn’t super exciting but if you have any questions feel free to post in the comments below!