When Is The Right Time To Refinance Your Home? |
Posted: October 17, 2018 |
When you have a home loan at a fixed-rate, you will have the same mortgage payment until the end of the loan, unless you find a better rate and refinance. Refinancing can help you obtain a lower rate for the rest of your loan term and save money, but you should know what refinance actually means and what you should take into account before you decide to go through the process. Generally, it’s easier to refinance instead of purchasing a new home, particularly when you’ve lived in your home for a while and have equity. But, you will face paperwork and closing costs, so you need to look at how much a refinance will cost and see whether or not it will still save you money. Refinancing a mortgage means paying off a current loan and getting a new one. Homeowners usually refinance:
But there are some benefits and pitfalls. One pitfall of refinancing can be additional costs. The refinanced mortgage needs appraisal, title search and application fees. Therefore, it’s imperative for a homeowner to decide whether refinancing offers a tangible benefit. Secure a Lower Interest Rate Shortening the Loan’s Term Read : What You Should Know Before Refinancing? Before you look to refinance, here are few things to consider: 1) Credit score 2) Debt, income and payments 3) Your home value 4) The Bottom Line If utilized carefully, it can help in getting debt under control. Before you refinance, take a close look at your financial situation and ask questions such as “How long do I plan to continue living in this house?” or “How much money will I save by refinancing?” Remember that refinancing will cost you some amount of the loan’s principal in fees and/or closing costs. It could take years for you to cover your costs with the savings garnered by a reduced interest rate or a reduced term. Therefore, if you don’t want to stay in the home for too long, the cost of refinancing may wash out any of the potential savings.
|
||||||||||||||||||||||||||||||||||||||||||
|