If you have multiple debts you are paying off, one way you may be able to make them more affordable is to consolidate them through refinancing.

In this post, we will explain what the advantages are of using this method to consolidate and manage your debts.

Consolidate Your Debts

1. Stop paying high interest rates. One reason you may be having a hard time paying off some of your debts is because they carry high interest rates. Over time, pouring money into higher interest can erode your finances significantly. When you consolidate your debts by refinancing, they are incorporated into your mortgage. Now, the only interest rate you have to deal with is the one for your mortgage itself. If that is significantly lower than the previous interest rates you were paying, you can save  money over the long haul.
2. Boost your credit score. If some of your existing debts involve the use of credit, your credit utilization ratio should decrease when you consolidate. There will also be a reduction overall in your quantity of debts. The result can be a boost to your credit score.
3. Keep track of your finances. Some borrowers have a difficult time keeping up with their debts because they lose track of what they need to pay. But that is pretty much impossible after consolidating all of your debts into your mortgage payment. So long as you remember to make that one payment every month, you will be on track.
4. Adjust your mortgage to better suit your needs. Could your mortgage itself be more affordable, or better meet your needs in other ways? This is a time for you to re-evaluate your mortgage and see if it can be adjusted to help you save even more money.
5. Reduce stress. Trying to keep up with payments on high interest debts is stressful. Once you get rid of the high interest and consolidate everything into one simple payment, you will be able to breathe easier.

Consolidate Your Debts and Start Saving Now With MMS Mortgage Services

MMS Mortgage Services helps homeowners in Farmington Hills and throughout Michigan to streamline their finances and save through debt consolidation. To find out how we can help you meet your financial goals, please give us a call at (248) 788-0800. We are also licensed in Alabama, Colorado, Connecticut, Florida, Indiana, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, and Tennessee.

Any person that owns a home with an existing mortgage is eligible to refinance it, which basically means getting a brand new mortgage loan. Your ability to refinance depends on several factors, including how much equity you have in your home.

How Home Refinancing Works

When you refinance, you’re pretty much trading your current mortgage for a new one, usually with a new lender and interest rate. Refinancing is a way to save money and pay off your mortgage early.

It makes sense to refinance if you can lower your interest rate and pay off your mortgage more quickly. In addition, you have to re-qualify for a mortgage, which involves a credit check and most of the time a new appraisal is required. (but case by case underwriting may waive the property inspection aka appraisal).

Applying for a Mortgage Refinance

The first and foremost step to take in mortgage refinancing is to apply for it. You will have different options when you decide to refinance, and your lender will ask for the same information you gave them when you first bought your home.

Aside from that, they may ask for other documents such as:

• Two most recent bank statements
• Two most recent pay stubs
• Two most recent W-2s

If you’re married, your lender will also need your spouse’s documents. If you decide to work with a new lender, they will pay off the current loan, ending your connection with your current mortgage lender/servicer.

Locking In Your Interest Rate

Once you get approved for a loan, your lender may give you the option to lock your interest rate to ensure it doesn’t change before your loan closes. You can lock in your mortgage rate for anywhere from 15 to 60 days. The length of the lock depends on factors like your location, loan type, lender, etc. If your loan doesn’t close before this period ends, you may need to extend the rate lock, which can cost you money.

Another option you may be given is to float your rate, which means not locking your interest rate as you proceed to get your loan processed and approved. You may get a lower rate, but there’s also the risk of getting a higher one, which could disqualify you from an approval!

Underwriting

Once your application is submitted, your lender will begin the underwriting process, which involves verifying your documents. Aside from personal information, other details may include when precisely the home was bought and an appraisal for the value of your home. The appraisal is critical because it’s what dictates your options moving forward.

Home Appraisal

When you decide to refinance your home, an appraiser may visit your property to get an estimate of the home’s worth, so make sure it looks its best before the appraiser arrives.

If the appraised value is higher than the amount you want to refinance, you can complete the underwriting process, or amend your application to increase your mortgage loan amount. But if the appraised value is lower than the amount for which you are looking to refinance, you can either cancel your application or write a check to cover the difference between the appraised value and the current mortgage loan balance payoff amount.

Closing On Your New Loan

Once everything has been done, the only thing left to do is to close your new mortgage loan. Your lender will send a Closing Disclosure where you’ll see all the final loan details. You’ll attend the closing, usually with an escrow agent, an attorney representing the title insurance company or a closing agent from the title insurance agency. At closing, you’ll review the details of the loan and sign your loan documents. If your lender owes you money for closing costs or a cash-out refinance, you’ll receive the funds after closing, subject to any applicable right of rescission.

Final Thoughts

If you’re in a bit of a tight financial situation, refinancing your current mortgage loan may be a great solution to solve your troubles.

MMS Mortgage Services offers programs for a mortgage refinance in Michigan. Every homeowner must have options for paying their mortgage loan with ease, and our financial experts are there to help you before and after the closing. Contact us today at (248) 788-0800 or toll free at (800) 945-4506 then press 2, to learn more!

The housing market and mortgage rates have been and will continue to be in constant flux. Due to the historically low interest rates, it is an ideal time to get a mortgage loan for the house of your dreams, investment property or vacation home.

Lenders still have a keen interest in your financial responsibility as a borrower, so there are different qualities they need to consider before concluding whether or not you can afford to repay the loan. With that in mind, here are some mortgage interest rate factors you can control and improve to boost your chances of getting a competitive loan.

 Mortgage Interest Rate Factors

1. Credit Score. You have full control over your credit score, one of the most important factors in representing your risk level to lenders. The higher the credit score, the better chance you have of getting a lower interest rate. In that regard, you will need to improve your credit score if you have a less-than-desirable history by keeping up with monthly payments, increasing your credit limit, securing a credit card, updating your credit report, and more.
2. Debt Ratio. Juggling multiple debts simultaneously can certainly make an impression about you in the eyes of lenders; It’s up to you. Lenders like to see how you manage debt, for better or worse. Properly managing multiple debts is highly desired by lenders. It says so much about you as a borrower, in a good way. Be careful though, lending/underwriting guidelines provide that no more than 41-43% of your monthly gross income be used to pay all your debt obligations. That includes credit card minimum payments, student/car/unsecured loan payments and your proposed mortgage loan payment. So be sure to pay off or pay down some of your obligations like car payments, credit card debts, and more before applying for a mortgage loan. This will help you be not only more qualified but you will qualify for a larger mortgage loan, which means more buying power. Last tip, pay your obligations prior to the due date and keep your usage below 30% of your credit limit. (10%-15% is most impactful to raise your credit scores making you even more qualified for loan approval).
3. Down Payment. If you have dedicated savings for your future home’s down payment, then you have a higher likelihood of lowering your interest rate. Meeting the 20 percent down payment instead of giving only 10 percent, for instance, lowers your risk level and gives you a loan with better rates.

The Bottom Line: Getting a Mortgage with Lower Interest Rates

Buying a home for the first time is truly a wonderful experience. Obtaining the right home loan for you is crucial since it ensures you can unlock the home of your dreams within a budget you can afford to pay down the line. With that in mind, you need to work with the right mortgage lender who can guide you through the mortgage process with little-to-no complications along the way.

Your Mortgage Expert in Farmington Hills

MMS Mortgage Services is a licensed mortgage lender in Michigan and beyond. We understand all the lending requirements and deadlines; that’s why we strive to deliver the best mortgage services in Michigan and help borrowers like you get the funding that suits your unique needs. Please call (248) 788-0800 or toll free at (800) 945-4506 then press 2, to schedule your free consultation, and see how we can help you stay on top of your finances, whether it’s your first time purchasing real estate or refinancing your current mortgage, we can develop the best mortgage plan for you!