It may seem that every time you listen to any type of financial report, read a blog from a financial planner or go online there is information on the benefits of refinancing your mortgage.
While in many cases this will be true, and with several very good reasons to do a mortgage refinance, it isn’t always the right choice. By carefully when considering your options and doing the math. Everyone’s situation is unique, so you’ll need to look into the details to find out whether refinancing is the right choice for you.
When To Refinance
The best time to refinance is when interest rates on loans drop significantly. It is important to remember that there are costs involved in a refinance, so the drop in the interest rate has to offset those costs and provide a lower payment. Sometimes the original mortgage has steep penalties and reading and understanding these charges will be essential.
In some cases, particularly with a 30 year fixed rate, moving to a 15 year fixed rate in the refinance is a smart choice. This will save interest over the term of the loan and also allow the loan to be paid off sooner. There will be higher monthly payments, but if interest rates drop significantly this too can be offset over the long term.
Another reason to refinancing your mortgage is a financial necessity. The loss of a job or a change in the family income for any reason may be a good time to refinance. A refinance can also provide access to home equity, but this needs to be considered as well as it may not offer the savings you expect.
Check Your Credit Score
As people make payments on homes and become more financially stable, it is also possible to have an increase in the credit score of the borrower. When this happens, it may be possible to qualify for much lower loan interest rates.
Take the time to consider your options and to discuss any refinancing with a trusted lending professional. This will provide you with the benefits and any potential risks involved in the process.
Let us discuss your options if you are considering refinancing your mortgage. For expert assistance from Guaranteed Rate professionals, see us online at www.guaranteedrate.com.
2 people like this post.