As summer winds down and back-to-school season kicks into gear, it's a great time to evaluate your finances and homeownership plans. Whether you're staying in your current home or thinking about buying a new one this fall, late summer is a smart time to get ahead of everchanging interest rates, explore refinancing opportunities, and prep for a smoother fall home purchase or refinance. Here's an end-of-summer checklist to help you get started.

1. Contact Your Mortgage Lender

   The first thing you should do is contact your mortgage lender and discuss your upcoming mortgage needs. If you don't already have a lender you work with, it's important do your research in order to find your perfect mortgage match. Talk to various lenders about up-front or out-of-pocket expenses such as closing costs and taxes that could impact affordability. You may also want a lender who is local, so that you can meet with them if needed and have a person with whom you are connected throughout your home buying journey. At FNBO, a Mortgage Loan Officer can answer all your questions and guide you through the remainder of this checklist for a smooth, stress-free experience.

2. Monitor Interest Rates and Be Ready to Lock In

   Mortgage rates change frequently, and even a small increase can mean paying thousands more over the life of your loan. Watch rates closely through your lender or a trusted mortgage site and stay alert for sudden or significant changes.

   If you're serious about buying soon, consider locking in a rate with your lender to protect yourself against future increases. Securing a rate lock means that your interest rate will not change between the date the rate is offered and your lock expiration date, if you meet certain criteria. This is especially important when interest rates are trending upward.

   Also, ask your lender about float-down options, which allow you to lock in your mortgage rate, and if rates fall during the underwriting process, you could still receive the lower rate.

3. Reevaluate Your Refinance Options

   Even if you already own your home, you may still benefit from refinancing, especially if it's been a few years since you locked in your current rate. With equity gains and changing financial goals, refinancing could help reduce your monthly payment, shorten your loan term, or free up cash.

   To determine if now is the right time to refinance your mortgage, it's important to calculate your breakeven point. This is the amount of time it takes to recoup all the required closing costs through the savings gained from a lower monthly payment.

   Calculating your breakeven point is simple:

   • Step one: Talk to your loan officer and add up all your refinancing closing costs.
   • Step two: Calculate what your monthly payment will be with the lower interest rate. Then, estimate your monthly savings compared to your current payment.
   • Step three: Divide your total closing costs by your monthly savings. This number shows you the number of months it will take to breakeven on your refinance.

   For example, if all your closing costs add up to $5,000 and you estimate you will save $200 per month by refinancing to a lower rate, then your breakeven point is 25 months.

   If you plan to stay in your home or keep your mortgage at that rate for more than 25 months, then refinancing your home probably makes sense. If you plan to sell your home in less than 25 months, it might not make sense to refi.

4. Check Your Credit Before Applying

   Your credit score plays a major role in your mortgage rate. Borrowers with good or excellent credit scores (690-720+) may qualify for a lower interest rate on their loan. Saving even a fraction of a percentage point could save you a significant amount over the life of a loan. If your credit history has room for improvement, it may be worth your while to boost your credit score before purchasing a home.

   You can request your credit reports for free from all three major bureaus - Equifax, Experian, and TransUnion - at AnnualCreditReport.com and carefully review them for any errors or outdated information. If your score could use a boost, focus on paying down existing debt, making all payments on time, avoiding new credit inquiries, keeping credit card balances low, and holding off on opening new lines of credit.

5. Get Pre-Approved Before the Fall Market Heats Up

   The fall season often brings a fresh wave of new listings and motivated sellers, making it a great time to buy, but not without some competition. Getting pre-approved for a mortgage now could help you stand out from other buyers and act quickly when the right home hits the market.

   A pre-approval also gives you a clear picture of what you can afford, factoring in your income, debt, and credit score. And since pre-approvals often include a rate lock, it can also protect you if rates rise in the coming weeks.

6. Get Organized for a Smooth Application Process

   Applying for a mortgage or refinancing your current loan involves submitting a wide range of financial documents to verify your income, assets, and overall financial health. Being organized and proactive with this paperwork can significantly speed up the process and reduce stress along the way.

   Most lenders will require recent pay stubs (typically from the last 30 days), W-2s, or tax returns from the past two years; recent bank and investment account statements; and a complete list of your outstanding debts and assets. If you're self-employed, you may also need to provide profit and loss statements or additional income documentation.

   Start gathering these materials now so you're ready to respond quickly to your lender's requests during underwriting. The more prepared and responsive you are, the smoother and faster your approval, appraisal, and closing process will be.

7. Set Your Fall Budget

   Before taking on a mortgage or making a home purchase, take time to review your full financial picture. Consider how a new monthly mortgage payment will fit into your existing expenses, especially with seasonal costs like back-to-school shopping, potentially higher utility bills and taxes, and holiday spending on the horizon.

   Don't forget to account for one-time expenses such as your down payment, closing costs, home inspections, moving fees, and any necessary home improvements. Establishing a clear budget now will help you makes smart and informed financial decisions when the time comes to move forward with a home loan.

Taking few proactive steps at the end of summer can pay off big this fall. Whether you're refinancing to save money or gearing up to purchase a new home, mortgage planning doesn't have to be overwhelming, it just requires a little organization and preparation.

If you would like information about purchasing or refinancing a home, an FNBO Mortgage Loan Officer is available to help.