A major push from homeowners applying for refinance loans drove the overall volume of mortgage applications.
According to the Mortgage Bankers Association, a significant number of homeowners applied for a new refinance loan to close out the month of October.
The uptick in activity resulted in a nearly 4% increase to the association’s Market Composite Index, which measures overall applications.
By itself, the refinance index rose by 6% and was about 88% higher from the same time a year ago.
Homeowners cannot resist today’s unbeatable interest rates.
Mortgage rates continue to drop to record lows, which is driving both refinance and buyer demand.
If you want to take advantage of today’s real estate market, here’s how you can plan for a successful refinance experience.
Boost your credit score
Pay close attention to your credit standing.
Your three-digit score goes a long way in determining how low your rate will go.
Before you begin, make sure to use free credit score providers to learn where you are and to make any necessary changes.
If you can understand your credit score and where it needs to be, you are setting yourself up for success.
Remember there are closing costs
Refinancing your home is likely to lower your monthly payment and bring down your interest rate.
While you will surely enjoy savings, it’s important to keep in mind that you must pay closing costs before taking out a new loan.
Some of the common costs include an application fee, appraisal fee, inspection fee, and a few others, including title search and insurance.
Don’t get caught off guard and start the conversation early about how much you can expect to pay for closing costs.
Show off upgrades
If you’ve recently made some upgrades to your home, make sure the appraisal team is aware.
Before you are approved for a new loan, an appraiser will evaluate your home’s value.
Come to the appraisal with your notes and receipts. This information will be used in the evaluation and can boost your home’s value.
Don’t delay responses
To make sure your refinance process goes through smoothly, do your very best to answer all questions and respond without delay to your lender.
It can take between 30-45 days to complete the process. With your help and cooperation, it can be sooner.
Be prepared for follow-up questions and requests for documents that speak to your credit, work and financial history.
Learn about your equity
Chances are, your home has added a significant amount of value through increased equity.
Equity is calculated by subtracting the amount you owe from how much your home is worth.
A cash-out refinance lets borrowers leverage their equity and pay for home upgrades, reduce debt or plan for a rainy day.
