Should you consider refinancing a mortgage? Some homeowners will have to face this difficult question at some point. The decision to pursue it (or not) is a major one, so it is important to give it serious though. Timing is key, and you should equip yourself with as much relevant knowledge as possible to make the right decision.
Refinancing multiple times is no small deal. You need to figure out what you want to accomplish to determine whether the plan is ideal or if it might be a better idea to stick with your current loan. The thought can be extremely overwhelming, so here are a few reasons to help you decide if it is time.
Lower Interest Rate
The interest rate will inevitably become one of your biggest expenses, so it makes absolute sense to come up with a solution to reduce it. Grab the opportunity to refinance if interest rates are low. You can save money by refinancing the mortgage for a home currently financed at a higher interest rate. Note, however, that a 1% decrease can be significant for a $500,000 loan compared to a $100,000 mortgage.
Refinancing during times of low interest rates means lower payments. If this is something you would like to see happen, then do your research and find out more about current mortgage rates. As Altius Mortgage, a trusted mortgage lender in Utah, puts it: “Take note that even a 1% difference between mortgage rates can result in a 10% difference in your monthly payments. If you’re waiting for the best rates to come along, it’ll help to know a few of the factors that affect their rise and fall.”Your financial status and loan type are some of the things that can affect your refinancing.
You can shorten the term of your mortgage when you refinance, but that could also mean you are paying more than what you previously spent. You can enjoy a low interest rate, but your payment may slightly increase. As long as the increase still fits within your budget, refinancing will not be a problem. Consider the additional costs when making the move, though. This may include bank, attorney, and appraisal fees.
Done properly, refinancing your current mortgage rate is a wise decision. It can be a money-saving more, as long as you know when and how to.