Refinancing your home loan can be a great way to save money on interest and reduce your monthly mortgage payments. However, if you’re looking to refinance when house prices are falling, you may face some challenges. It is important to speak to a Mortgage broker who will review the following.
Check your credit score
Lenders will use your credit score to determine whether you’re eligible for a new loan, and what interest rate you’ll be offered. If your credit score has dropped since you first obtained your home loan, you may need to take steps to improve it before applying to refinance.
Assess your equity position
Another important factor to consider when refinancing in a falling housing market is your equity position. If house prices have fallen significantly, you may find that you no longer have as much equity in your home as you did when you first took out your loan. This can affect your ability to refinance, as lenders may be less willing to offer you a new loan if you have a lower level of equity.
Shop around for the best deal
When refinancing in a falling housing market, it’s important to shop around for the best deal. Different lenders may have different policies regarding refinancing during a downturn, so it’s important to do your research and find a lender that is willing to work with you. You may also want to consider a mortgage broker, who can help you compare different lenders and find the best deal for your individual circumstances.
Consider your options carefully
When refinancing in a falling housing market, it’s important to consider your options carefully. If you’re struggling to meet your mortgage repayments, refinancing to a longer loan term may help reduce your monthly payments. However, this can also mean paying more in interest over the life of the loan. Alternatively, you may want to consider refinancing to a fixed-rate loan, which can provide more certainty and stability during a period of market volatility.
In conclusion, refinancing your home loan during a downturn in the housing market can be challenging, but it’s not impossible. By recruiting the assistance of a mortgage broker, you can increase your chances of successfully refinancing and reducing your mortgage payments.