Attractive interest rates are encouraging homeowners in South Carolina (SC) to refinancing their mortgage. Perhaps the most significant beneficiary of the friendly rates are folks trying to enjoy their golden years. That’s because refinance options can be especially advantageous for retirees on a fixed income.
Kiplinger nominated South Carolina one of the top 10 tax-friendly states for retirees. which draws a significant percentage of residents to the Palmetto state for retirement. South Carolina is well positioned to see a number of its home owners attempt to improve their current mortgage rates in South Carolina.
The right time to refinance in South Carolina
If someone is paying down a mortgage with an interest rate higher than the current 30-year fixed rate offered in South Carolina, it makes sense to look into refinancing for two primary reasons: 1) lower interest rates can lower monthly payments, and 2) refinancing products can provide cash for other purposes.
There’s no crystal ball when it comes to the timing of interest rates, so you can never know whether it’s wise to be waiting for rates to go down even further or better to be rushing toward refinancing before rates go up. However, economic policy has a history, and rates typically only change by a fraction of a percentage point. Moreover, rates have been at historical lows for several years now. In other words, if you’ve had your current mortgage for a while, it’s smart to reach out to a lender or at least crunch some numbers on a mortgage calculator.
South Carolina offers many incentives for the retiree community – refinancing in South Carolina can add further financial security for those on a fixed income. (Photo/South Carolina)
Find a lender in South Carolina
To find the mortgage you want, consider multiple lenders, especially ones who have successfully refinanced the mortgage of someone you know. Word of mouth recommendations don’t just count in the restaurant business, they mean a lot in the world of finance, too. Whether it’s a friendly recommendation, an online search result or something else, ask your prospective lender if they are offering home refinance loans with no closing costs. Refinancing with zero out-of-pocket expense is the ideal situation to be in. It doesn’t always happen, but the opportunities are there.
Remember it is not necessary to choose a lender in South Carolina, mortgage refinancing is completely legitimate to do across states and regions. However, the more local a lender is, the more likely they will have helpful information about real estate values. The bottom line is most people will choose a lender based on the interest rate and closing costs they offer.
Filing taxes, financing a new car, and purchasing a house … three experiences people put off thanks to the mounds of paperwork involved. If you feel the urge to procrastinate your refinancing research, consider a streamline refinance.
Streamline refinances are designed to keep the paperwork down and the popularity of refinancing up by simplifying the underwriting process. Nonetheless, due diligence must and does occur, so lenders typically limit who they’ll allow to do the streamlined version of a mortgage. In fact, some lenders will “pre-qualify” borrowers and make concerted efforts to reach out to them.
Streamline mortgage loans are government insured, so homeowners who have FHA loans or VA loans are highly coveted by lenders. Their applications for refinancing tend to be approved more easily because these types of loans are connected to or created by government programs. A significant portion of the administrative tasks and paperwork can be taken from the original or last mortgage financing, saving time and effort on the loan package. This allows the processing of the mortgage refinancing to be less costly this way, too. It’s a win-win for everybody.
Lock the current mortgage rate in South Carolina
Try not to lock in interest rates as they are rising. Mortgage rates often follow 10-year Treasury bond rates, so rising bond rates can signal a rise in mortgage rates. Try to lock the mortgage refinance rate as rates are falling. It may be necessary to move quickly to lock a rate, so it is best to be prepared by submitting all documentation as soon as possible.
Whether a homeowner is a lifelong resident of South Carolina or a relative newcomer, using a home to increase cash flow may be a smart move if a lender can offer competitive terms and streamline the refinance process. Then lock the rate and pocket the cash.
What matters most
Lenders care most about your creditworthiness—demonstrated by your credit score. When you ask a lender to do a refi, they are going to “pull your credit,” which means they will check your credit—or FICO—score that is reported by the credit bureaus like Transunion or Equifax. Scores above 700 are considered good, and scores can go as high as the 800s. The higher your score, the better interest rate you’ll receive.
Somewhat ironic is the fact that your credit score goes down every time someone pulls your credit. A number of banks that issue credit cards now offer their customers ways to check their credit score at no cost and with no penalty. And, if you keep a credit card but use it sparingly and pay the bill on time, that credit card will actually boost your credit score.
Other factors impacting your credit score are:
- Payment history—If you’ve paid your bills on time and avoided things like foreclosures, you have a good payment history. If you’ve been using credit for many years and have avoided late payments or discharged debt, this will boost your credit score, too.
- Amount of debt—If you owe a lot of money on your home, your car or your credit cards, then you are riskier to lend to than someone who doesn’t have many debts.
- New debt—If you have opened a lot of credit lines, especially within a short amount of time, you will take a hit on your credit score.
If your credit score is less than awesome, don’t let it keep you from inquiring about a refi. Borrowers with credit scores of 620 can often refinance their home mortgage with no major issue.
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