Mortgage Refinance
Consider a mortgage refinance if you’re looking for a mortgage that better accommodates your unique needs.
This strategy involves replacing an existing mortgage with a new one to change the interest rate and loan terms.
When It’s Time To Consider Refinancing
Refinancing your mortgage is a major financial decision, and if it’s not done at the right time, it can end up doing more harm than good.
It’s generally a good idea to consider this financial strategy when your credit score has gone up and your debt-to-income (DTI) ratio has gone down. This will help lock in better interest rates and potentially lower your mortgage. If you feel your mortgage term is too long or short, it may be time to consider refinancing.
Your home equity will also determine whether refinancing is the best option for you. If your home’s value drops below the price you paid, having enough equity is crucial.
A good rule of thumb we recommend is to refinance only when you can lower your rates by at least a full percentage point. Otherwise, once you factor in the closing costs, it may end up costing you more.
The Benefits of Refinancing Your Mortgage
Some things you can look forward to include:
Tailored Solutions
You could potentially save thousands with a lower interest rate. Having a high credit score and low DTI will help secure a lower rate.
Lower monthly mortgage payments
A lower interest rate means lower monthly mortgage payments, leaving more room in your budget for renovations that will boost your house value. This is a win-win situation.
Decrease your loan terms
Reducing your interest rates will also allow you to reduce the terms of your loan. This is great if you want to pay off your loan sooner and benefit from a reduced interest expense.
Change the type of mortgage
Refinancing your mortgage from an adjustable rate to a fixed rate can provide stability with guaranteed, predictable monthly payments.
Cancel your private mortgage insurance
You can lower your monthly mortgage fees by getting rid of your private mortgage insurance, which can range between 0.46% to 1.5% of the loan amount.
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