Refinancing Information

5 Things to Know About Refinancing Your Mortgage

Record-low interest rates have millions of homeowners on a mission to refinance their mortgages. However, decreasing home values and declining credit scores have created a few unwelcomed challenges. While these challenges have made some St. Louis mortgage companies reluctant when it comes to lending, our team at USA Mortgage can always find a mortgage solution to fit your individual needs. If refinancing is on your to-do list this year, keep in mind these five key things provided by our team at USA Mortgage – a preferred St. Louis mortgage company.

  1. CREDIT SCORE. Having a good credit score makes you a more desired customer as well as an easy qualifier. The best deals are typically reserved for those with a credit score above 740.
  1. EQUITY. With home values still falling, the 20 percent down payment you paid a few years ago may be long gone, leaving you with more mortgage debt than your home is worth. Before worrying, determine your home equity so our USA Mortgage team can work with you on how to proceed.
  1. DEBT RATIOS. Knowing what you owe is important. To qualify for a refinance, your new mortgage payment (including taxes and insurance) should amount to less than 30 percent of your gross monthly income. Additionally, your total debt payments (including your car, credit card and student loans) should not exceed 40 percent of your gross income.
  1. TIMING. Timing can be everything. A less expensive loan is possible if you are willing to go with a hybrid Adjustable Rate Mortgage (ARM), which offers a fixed rate for five years. Here’s the catch: If you plan on staying in your home for more than five years, it is possible you may run into higher interest rates and monthly payments in the future. The 5/1 ARMs could potentially save you thousands of dollars if you move or repay the loan before the fixed time period is up.
  1. ANNUAL PERCENTAGE RATE (APR). A lower rate can sometimes mean a lower payment, but not always. Rates and fees are somewhat like a teeter-totter; if you want one rate to come down, the other is likely to go up. Therefore, keep an eye on the APR as it factors in both the fees and the interest rate.

USA Mortgage is in the business of assisting current and future homeowners with walking into an affordable home. Refinancing may be the perfect avenue for you. So let’s find out for sure and get started! You do your part – by following our how-to’s and tips – and we’ll do ours. Contact us today to speak with one of our experienced St. Louis mortgage lenders.