How To Know When The Time
Is Right To Refinance Your Home
home equity articles and tips
Finances are one of the more confusing items to figure out in life. It can be challenging to figure out a budget, loan payments, what amount of debt you can afford, and when you add home refinancing it can get even more confusing. You may be paying $500 or more a month in interest on your home loan depending on the amount you borrowed and how long you have been paying it off. However, you may be able to save money by refinancing your loan. How do you know when its the right time to actually do so?
What's The Interest Rate On Your Loan
If the interest rate on your loan is higher than the market rate today, it is almost always a good idea to refinance your home then. Reducing your interest rate from 5 percent to 3 percent could save tens of thousands of dollars over the life of your loan. The savings are even higher if you are still paying 8, 10 or 12 percent on loans originated 10 or 15 years ago.
Do You Have The Credit To Qualify
The best loan rates are generally available to those with good credit and a sufficient down payment. This is true whether you are taking out your first home loan or are looking to refinance. If your credit score has improved recently, it may be in your best interest to get a loan that is more in line with what you deserve based on your record today.
Will Closing Costs Eat Away At Your Savings
When you refinance a home loan, there may be closing costs that you have to account for. Depending on how much you have to pay out of pocket, you could negate the savings that you realize for months or even years. Therefore, you should either ask to have closing costs waived or wait until you have more equity or money to put toward those costs.
Familiarize Yourself With The Refinance Process
Before you submit an application to refinance your mortgage, it may be a good idea to go online to learn more about the process of doing so. You may also want to visit your preferred lender's website to live chat with a representative or learn more about the loan options that the lender provides. This will help you determine if you qualify for a loan with reasonable terms. You could also seek the help of professionals, like those at Assurance Financial Group, to ensure that you thoroughly understand the process and are moving forward correctly.
There is no specific right time to refinance your home loan. Instead, you have to do a thorough analysis of your current loan terms and financial situation to determine if it is worth getting a different loan. Be honest with yourself and your situation to determine what is going to be right for you. If the time is right, make sure to take your time before agreeing to any loan to ensure that you get the best terms.
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