When should I refinance is a very important question but why you want to refinance is most important. So you should take a very rational approach in determining if a mortgage refinance is the right option for you.
Make your Financial Goal
First, check and evaluate your current financial health and then make your long and short term goals, know the maths and if it fits with mortgage refinancing go for it.
Comprehend the Process Of Mortgage Refinancing
Take time to understand thoroughly how mortgage refinancing works, what are the merits and demerits of refinancing, is there any closing cost or your lender provides you with some additional benefits.
You should consider all the fees and other probable downsides when determining whether a refi is a right fit for you.
Gather some Additional Information
Check your documents are ready with you and you are good to go, your credit score, how much is your current mortgage, what is your home equity now, interest rates at your location, calculate your refinance payments.
When Should I Refinance?
The best time to start considering refinance is when you notice mortgage rates are falling below your current loan rate.
But frankly speaking, don’t depend too much on the low mortgage rate that you see in some advertisements. Because refinance rates change every day and the rate you have seen on the advertisements may be higher or lower at the moment.
With a good credit score and proof of steady income and your equity in your home is good enough to give you a competitive rate.
So when your credit score is good enough and when the interest rates are lower than your current rate by at least 1%.
When Your Credit Score Increases
The lower rate is not the only opportunity when you can refinance your house, you may also qualify when your credit score is than when you have applied for a loan. A good credit score is also helpful for you to give a competitive interest rate.
Why your credit score is so important?
Your credit score is a numerical indication of how well you manage debt. If your score is high, it’s because you have managed all the loan payments in a timely manner and this shows lenders that you are a responsible person who can manage their debt and this decreases the risk of your default or foreclosure.
On the other hand, if your score is low it’s because you are not good at managing your debts.
Lenders take your good credit score in a very positive manner and you will get a less competitive rate with a good credit score because your chances to miss a payment or fall into foreclosure is less. This means the lender is taking less risk and can give a lower interest rate. If your credit score is low, it means chances are higher that you might not pay back what you borrow and hence lenders give a higher rate to manage their risks.
When Interest Rates Are Low
The best to refinance your mortgage is when interest rates on house loans are very low because your interest rates play a very huge role when you end up paying for your house, you can save lots of money by refinancing your mortgage to a lower rate.
The Bottom Line: Refinancing your home can bring money if you make informed decisions
Right now interest rates are at their historic lows and it’s the best time to go for refinancing, we at PIPED PIPER GROUP LLC understand that everyone has a different goal and different financial needs and that’s why you can have a detailed discussion with one of our experts. Don’t delay just make use of this opportunity.