Managing finances as a single mom can be quite challenging. It can be frustrating, especially when you have to multitask between taking care of yourself and your children and establishing financial security. If you’re having a hard time paying for existing loans with high-interest rates recently, then you should consider taking out a refinance loan.
Refinancing a loan is simply finding a lender that perfectly matches your financial need. That lender is supposed to pay for your existing loan and replace it with another loan offer that typically has better term options and lower interest rates. Common loans that are covered by refinancing include student loans, car loans, and mortgages.
Before you take out your very first refinance loan, you better check out these three refinancing tips for single moms that can help guide your decisions:
- Set Your Refinance Goals
If you’re ready to tackle the refinance process, defining what exactly your financial goals are and planning them accordingly can help you in disentangling the complexities of refinancing. Here are some of the things that you should consider when setting your refinance goals:
- Determine why you should choose refinancing
A good place to start when setting your refinance goals is to determine exactly why you should opt to refinance. Is it to reduce the interest on your monthly payments or to get shorter terms on your loan? For single moms planning to refinance mortgages, you can also tap into your home equity for debt consolidation, home improvement projects, or even to pay for your child’s education.
- Know your credit score
Take the time to look at your credit reports because it can play a significant part when lenders assess what loan type you’d qualify for and how much interest rate you’ll be getting. Be sure to check for any errors on your credit report because not being able to fix these immediately can lower your credit score.
- Anticipate closing costs
Similar to taking out most common types of loan such as mortgage and car loan, there are specific costs that you have to anticipate when applying for refinancing. Possible closing costs include fees for application, appraisal, inspection for pests and the likes, title search and insurance, and, of course, attorney review and closing fees.
- Rates vs the Term
Don’t just focus on interest rates when comparing different refinance loan offers. It’s important that you know your goal first. For instance, you may want to get a loan offer with the lowest interest that has the longest term if your refinance goal is to reduce your monthly payments. However, if your goal is to shorten the period you pay for your loan, you could choose a loan offering the shortest term still with a low-interest rate.
- Shop Around To Find The Best Rates
Refinancing an existing loan is an important decision, so it’s crucial that you research thoroughly on your loan options. It’s recommended that you get, at least, three refinance loan quotes from reputable lenders.
If you’re having difficulty finding the right lenders, then you can opt to hire a broker to do the job for you. Check out sites like https://certifiedmortgagebroker.com/hamilton/ and see how smooth refinance transactions can be for existing mortgages when you choose to refinance with a licensed mortgage broker.
However, keep in mind that brokers are only there to assist you in your refinance process. It’s still important that you invest some time to really shop around for loan options and to use a refinance calculator in finding the best rates and loan terms.
- Increase The Value Of Your Home
Lastly, this refinancing tip is vital for those refinancing their mortgages as it determines how much your home is worth for your prospective lenders. You could increase your home’s value by doing a few tricks such as keeping track of your home upgrades by keeping receipts and before and after photos. Also, you can get notes from home décor experts’ guide on the best home improvement ideas to get lasting impressions from appraisers.
Is It Time To Refinance?
Remember these three tips and use them as a guide when deciding whether refinancing is the best option for you as a single mom. To simply put, if refinancing a loan could be beneficial to your overall financial health, then it’s probably a good idea to take out one right now.
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