With so much instability in the mortgage rates, mortgage refinancing has become a popular option for many homeowners in Singapore. For many Singaporeans, refinancing housing loan in Singapore may sound like a good idea, however, it is not that simple and easy in practice. You have to keep a lot of things in mind before you proceed with your mortgage refinancing as it may not always be the best option for you.
Here are 6 important points to keep in mind before filling out your mortgage refinancing form:
Total Amount of Equity
In general, if you do not have at least 20% equity in your home, you won’t be able to qualify for a new loan. Therefore, finding out how much equity you have in your home is very important before you proceed with your mortgage refinancing decision. Having little equity in your home means you owe more on your mortgage than the actual worth of your house. Under such conditions, it is better to stay away from mortgage refinancing. If you still consider that the current interest rates are very attractive and can drastically reduce your monthly payments, you can always bring cash to the table to settle your loan balance and qualify for a refinance.
Your credit score plays a vital role in securing a good mortgage rate. A good credit score can put you in the driving seat while negotiating the financing of a mortgage loan. On the other hand, a bad credit score means you will not only face trouble qualifying for a mortgage loan, you will also not be offered attractive rates. Make sure to check your credit score before you even apply for a refinance mortgage loan.
Your Future Plans
If you are thinking about selling your home in the near future, refinancing your existing mortgage loan will not be a wise decision. Under such conditions, it is a better option to pay off your existing loan rather than applying for mortgage refinancing.
Your Financial Obligations
Before you apply for a refinancing mortgage loan, you will need to take a closer look at your current and future obligations. Low-interest rates do not mean that you should get your mortgage refinanced at any cost. You also need to put into the equation your current job or business status. In case you have employment concerns or your business is not performing well, you are better off refinancing into the lowest possible payment plan.
- The Terms And Conditions Of Your Current Loan
Homeowners with variable rate mortgages may switch to a fixed-rate loan if the mortgage rates are attractive. This is particularly good for the consumers with a volatile variable rate mortgage.
- Second Mortgage
In case you have a second mortgage or line of credit, you might face additional complexities and reduced loan amount while applying for a refinancing mortgage loan.