Is Now the Right Time to Refinance Your Home?
If you currently have a mortgage, chances are you’ve heard about refinancing. In fact, maybe you’re ready to refinance your home. While there are a number of reasons to pursue refinancing, you want to refinance at the right time to get the maximum benefit.
Making Sure It’s The Right Time to Refinance Your Home
Refinancing your home means taking out a new loan to replace your existing mortgage. This can be appealing for many reasons, but it comes at a cost. Refinancing costs a percentage of the loan’s principal and also has other fees for the application, appraisal, etc. Therefore, as with any other major decision, you want to make sure that moving forward is a financially sound decision.
There are many reasons why you might consider refinancing. It may be a good idea to refinance your home loan may be a good idea if you’re frustrated or unhappy with the current terms of your mortgage or if you want to pay your mortgage off earlier. It could also be a good option if you need access to the equity in your home to fund a child’s or your own college tuition, unexpected expenses, or to pay for repairs to the home. Ultimately, the reason for refinancing will vary from homeowner to homeowner. As long as the benefits outweigh the cost and it makes financial sense, refinancing can be helpful.
Benefits of Refinancing
Many times, after you have already taken out a mortgage, loans become available that offer better terms, rates, etc. Just as when you picked out your initial mortgage, there are numerous types of refinancing loans available. By choosing to refinance your home, you can take advantage of these new loans. Benefits of refinancing include:
- Locking in a lower interest rate (should be a minimum of 2% reduction)
- Shortening the loan’s term with minimal difference in your monthly payment
- Converting from adjustable-rate to fixed-rate
- Access to the equity in your home
When You Should NOT Refinance
Even though it can be tempting to change the terms of your mortgage or to get extra cash out of your home, there are times when refinancing is not advisable. Refinancing probably isn’t for you if you:
- You have paid on your mortgage for 10+ years
- Your current FICO score is lower than when you initially applied
- You plan on leaving your home in the next few years
Consider Your Financial Goals
Everyone has their own reason for pursuing refinancing. However, before deciding to refinance your mortgage, you want to make sure it is the best financial decision for your circumstances. This requires being honest with yourself about why you want to refinance. While this financial tool can help reduce your mortgage payment, shorten the term of your loan, or help you build equity quickly, it can also make the debt trap worse. Therefore, you need to make sure refinancing will actually align with the financial goals you have set for yourself.
We Can Help
Here at Mortgage Solutions Financial, we have several refinancing options available. Contact our loan specialists today to discuss refinancing your home. We can help you find the financing option is best for you and help you achieve your goals. Let’s get started today!