The Best Time to Refinance Your Mortgage
This is a common question for homeowners typically from soon after they sign the mortgage papers the first time around.
It is a natural thing to want to preserve the money that is worked so hard for, and refinancing is a great way to do that.
But there are some circumstances when refinancing should not be considered and some circumstances when it should.
To put it simply refinancing is getting a new home loan to repay the existing mortgage on the house.
What makes this beneficial is when the new loan has significantly better terms than the original loan, creating big savings for the homeowners.
The situation when refinancing is a good idea that is most often overlooked is when a homeowners credit score improves.
With so many options and ways to get a mortgage these days even those with bad credit can get a mortgage, but the terms are likely going to be quite unfavorable compared to a mortgage for those with good credit.
While a lot of homeowners are willing to accept these poor terms in order to get their dream home, there is no reason to keep those bad mortgage terms if your credit situation changes.
Many things that cause a homeowners credit score to fall resolve themselves over time.
Even the most serious of credit problems like bankruptcies or repossessions will only remain on a credit report for a certain number of years and then they disappear.
If a homeowner keeps their current credit obligations up to date and waits for some of these more serious problems to resolve themselves, a significant jump in credit score can be expected.
At that point the likelihood of getting vastly more favorable refinance terms is almost certain.
On the same train of thought it may be time to refinance if your financial situation has changed.
If a homeowner is making considerably more money then it may be a good idea to get a shorter-term mortgage to save on the amount of interest being paid.
Or if a homeowner has recently lost their income then refinancing with a longer-term refinance will save money on the monthly payments.
Finally it is definitely time to reconsider refinancing if the mortgage interest rates drops.
Lower interest rates are enticing to most homeowners since it always means that less interest will be paid over the course of the loan.
However, it is important to weigh these savings against the cost of a refinance.
Closing costs, application fees, and other miscellaneous fees can quickly eat up any savings and refinancing under those circumstances is not a wise decision.
Evaluate the situation carefully to determine if refinancing is really the best choice.
Just because the interest rate is lower does not mean that the overall refinance will be better.
It is a natural thing to want to preserve the money that is worked so hard for, and refinancing is a great way to do that.
But there are some circumstances when refinancing should not be considered and some circumstances when it should.
To put it simply refinancing is getting a new home loan to repay the existing mortgage on the house.
What makes this beneficial is when the new loan has significantly better terms than the original loan, creating big savings for the homeowners.
The situation when refinancing is a good idea that is most often overlooked is when a homeowners credit score improves.
With so many options and ways to get a mortgage these days even those with bad credit can get a mortgage, but the terms are likely going to be quite unfavorable compared to a mortgage for those with good credit.
While a lot of homeowners are willing to accept these poor terms in order to get their dream home, there is no reason to keep those bad mortgage terms if your credit situation changes.
Many things that cause a homeowners credit score to fall resolve themselves over time.
Even the most serious of credit problems like bankruptcies or repossessions will only remain on a credit report for a certain number of years and then they disappear.
If a homeowner keeps their current credit obligations up to date and waits for some of these more serious problems to resolve themselves, a significant jump in credit score can be expected.
At that point the likelihood of getting vastly more favorable refinance terms is almost certain.
On the same train of thought it may be time to refinance if your financial situation has changed.
If a homeowner is making considerably more money then it may be a good idea to get a shorter-term mortgage to save on the amount of interest being paid.
Or if a homeowner has recently lost their income then refinancing with a longer-term refinance will save money on the monthly payments.
Finally it is definitely time to reconsider refinancing if the mortgage interest rates drops.
Lower interest rates are enticing to most homeowners since it always means that less interest will be paid over the course of the loan.
However, it is important to weigh these savings against the cost of a refinance.
Closing costs, application fees, and other miscellaneous fees can quickly eat up any savings and refinancing under those circumstances is not a wise decision.
Evaluate the situation carefully to determine if refinancing is really the best choice.
Just because the interest rate is lower does not mean that the overall refinance will be better.
