Is now a good time to refinance a home loan? With mortgage interest rates at the lowest levels many of us have ever seen, refinancing is all the rage. Here’s what you should know before you opt for a new mortgage on your home.
When it comes to refinancing, there isn’t a surefire answer that fits all homeowners. Instead, the answer depends on your unique circumstances and goals. Let’s look at the pros and cons of a home refinance.
Benefits of Refinancing
Your grandparents probably never thought about refinancing their home loan. Instead, they dutifully made years of mortgage payments until the loan completed. In contrast, today’s borrowers look at the perks of refinancing and often choose to go with a new loan. There are significant benefits that come with switching out a mortgage with a lower interest loan. Examples of reasons to consider refinancing include
● Replace an adjustable-rate loan with a fixed-rate one
● Receive a lower interest rate loan
● Access to home equity
● Lower payments and better cashflow potentially
The current low-interest rates might make moving into a fixed-rate mortgage an excellent financial decision for your family. Unlike an adjustable-rate mortgage, you’ll know what your mortgage payment will be throughout the loan.
There’s no doubt that a smart refinance can save you money each month. Reducing a mortgage interest rate by as little as one percentage point can save thousands of dollars.
A cash-out refinance is a terrific way to access your home equity. Of course, you must have sufficient ownership in your house to take advantage of this option. Some loan programs require more retained equity in the home after a refinance then others. Now, remember how we said that refinancing isn’t for everyone? There are some downsides. Follow along for some of the disadvantages.
Read up on the potential negatives of a significant financial decision before signing a contract. Caution is especially wise when the decision concerns your home. Examples of significant refinancing cons are detailed below.
Home Loan Begins Again
The term of your home loan begins again. By starting fresh, you’ll make many more mortgage payments over the loan’s life. More payments equals more money if you stay in the house until you complete the mortgage. You may want to ask your Mortgage Advisor for a customized Amortization to stay on track with paying your loan off in the same amount of time you currently are on track to do.
Don’t forget that it costs a hefty amount of cash to take out a home loan. Refinancing a mortgage means that you’re replacing your current loan with another loan. Expect to pay for the application, appraisal, origination, title, and closing costs on your new loan.
Delay in Savings
Did you know that experts say that it can take forty-eight months to recover your closing costs in a refinance? Do you hope to remain in your house for at least four more years? If not, the money you’ll save in your monthly mortgage might not be worth it financially.
Now you’ve seen some of the primary benefits and downsides associated with a mortgage refinance. Replacing your home loan with a more advantageous one can make a real difference in reaching your long-term money goals.
Is Now a Good Time to Refinance Your Home?
Does a refinance work for you right now? Is now a good time to refinance your home? Read on for reasons to contact your mortgage broker for information on high- quality ways to refinance your home mortgage.
Competitive Credit Score
What is your credit score? Lenders reserve their best home loans for people with a robust credit score. It is sometimes smart to clean up poor credit before applying for a new home loan.
Do you plan on living in your house for more than a few years? If you want to stay in your Lane County home over the long-term, a refinance could be a smart move.
Money Under Thirty suggests that you pull the trigger on a home refinance if the interest rate is at least one percent below your present one.
Can you afford to take on a fifteen-year home loan? If so, refinancing is an excellent way to reach the financial freedom that comes with owning your home outright.
Does your situation meet the above suggestions? Remember that the decision to replace a mortgage depends on your specific needs and goals. Don’t hesitate to chat with a trusted mortgage broker for sensible advice.
Is now a good time to refinance your home loan? There are plenty of benefits to a thoughtful refinance, but there can also be downsides. Carefully examine the pros and cons to see if it will improve your overall financial condition before you commit to a refinance.
The mortgage brokers at Strategic Mortgage Solutions excel in helping families throughout Lane County, Oregon, with home refinances. Contact us today for answers on how refinancing your home mortgage can help you reach your financial goals.