So you may hear a lot of about refinancing from friends, family, and co-workers, but is it the right time for YOU to refinance?
For many homeowners - now is the time! While mortgage rates do fluctuate over the years, they recently remain incredibly low.
Here are some questions to ask yourself if you're considering refinancing:
1. How is my credit score?
Having a good credit score is a huge determing factor in the rate and refinance product that you will receive. The lowest rates will go to those with the highest credit scores. Even the difference of 1 point in interest rate could cost you thousands of dollars in savings over the life of your loan.
2. What is the amount of equity I have in my home?
The first step here is to determine your home's value. Home Equity is the value of ownership in your home (the current market value less any outstanding mortgage payments.) It’s important to know your equity to determine if you're eligible for a refinance.
3. How long do I want to live in my house?
This is important to know when calculating the break-even point of your refinance. Are you close to paying off your mortgage, or do you still have a long way to go? Make sure the savings outweigh the costs.
4. What type of loan and rate do I currently have?
You may have an adjustable-rate or interest-only mortgage, meaning you could benefit from switching to a fixed-rate loan and locking in at a low rate. By doing so, you can avoid the risk of paying more as rates rise and adjust.
5. What are my financial goals and objectives?
Your financial goals could include lowering your monthly payment, saving money to cover any unforeseen emergency expense, lower your term, change your loan type, or get cash out to perform a home renovation or fund a wedding.
If you have trouble answering any of the above questions - that's ok! Set up a quick meeting with a mortgage originator to talk through your concerns, determine your credit store, discuss your goals and refinance options, and help you determine your home's value.