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Below are a few ways to prepare yourself to be ready to refinance if the opportunity is ever there:
- Make a good down payment: In order to get the very best mortgage terms, it is likely necessary to put 20% down. A sizable down payment also increases your chances of being able to refinance later on.
- Be aware of prepayment penalties: These penalties often go away over time, however, they may make it difficult to refinance early on in the life of the mortgage.
- Keep on top of your credit: If you are looking to refinance your loan, chances are you will need to qualify again, especially to obtain the very best rates.
- Take good care of your home: Refinancing lenders will want an equity cushion between what your home is worth and how much you are borrowing. Don’t let the value of your home decrease due to poor maintenance.
- Consider the right loan: If you start with a 30 year loan, you should probably look at 30 year refinance rates. Once you make more principal payments, refinancing to a 15 year loan may make more sense.