Being a homeowner comes many questions. When it comes to your mortgage, you likely have many of them. One of the most popular being, “Should I refinance my existing mortgage or not?” Let’s take a look at the answer to this burning question so you can evaluate what approach is right for you.
Current Interest Rates Are Way Below Yours
One thing about the housing market is that interest rates can fluctuate over time. When you time it appropriately, you can find yourself cashing in on some excellent money-saving offers. If the current average market interest rates are significantly below your current mortgage interest rate, it’s a sign that it’s time to refinance. Interest builds up tremendously over the life of your loan due to the long term length of a mortgage. Therefore, one refinance can save you tens of thousands of dollars over the life of your loan.
Having Difficulty Paying Your Mortgage Payments?
Your financial state can change from time to time. Maybe you accepted a lower-paying job with great future potential. Perhaps you got laid off. Or, maybe you signed up for a variable home interest rate and are now regretting that decision. Either way, you need to make a smart financial decision. If you want to stay in your home, you can refinance your mortgage to achieve a lower rate. To do this, take advantage of lower loan interest rates and extend the life of your loan.
Your Credit Score Has Significantly Improved
We all know by now that our credit scores have a significant impact on our ability to borrow money and the interest rates that we pay to do so. Those whose original mortgage was an FHA loan, or another program where below-average credit scores were accepted, you likely have a higher than average interest rate on your loan. If you’ve been working to improve your credit score and it’s increased tremendously, it may be time to consider refinancing to get a lower interest rate.
When it comes to refinancing your existing mortgage, there are many factors to consider. You should take some time to understand the advantage of refinancing and pitfalls before you decide on your approach. The indicators above can help to alert you of when refinancing is going to be in your best financial interest.