Is Now A Good Time To Refinance Your Mortgage?
With the many factors to consider in mortgage refinancing, many homeowners wonder if now is the right time to refinance their mortgage. Refinancing your mortgage has a lot of advantages, like helping you to manage your debt.
However, one has to be sure that it is the right thing to do. There are several reasons why refinancing your mortgage might be the best thing to do or not. In my opinion, the advantages are more.
Here are some reasons why it is an excellent time to refinance your mortgage. You can consider refinancing if you meet these conditions. If not, you should drop the idea for now.
Refinancing your mortgage will earn you lower monthly payments
With a mortgage, you know you will not be having the whole of your salary to yourself. However, if the chunk you have to take from it is too big to keep you living on the remainder, it is a good time to refinance your mortgage.
With the number of responsibilities one has to cater to every day, any reduction in the salary means a lot. Having that reduction reduced is a reason why refinancing your mortgage now is a smart move.
Refinancing your mortgage will earn you better loan policies
If the policies under which you got your loan are getting too tedious for you, it is time for you to refinance your mortgage. Your mortgage might not be convenient to maintain, but it should not be too hard. If you find it challenging to keep up with the present mortgage terms, you might consider refinancing it and having better options.
Refinancing your mortgage will earn you reduced interest rates
Refinancing your mortgage at this time is a smart move because it will earn you reduced interest rates. Going with Black Knight, a mortgage data company’s submission, 13.1 million borrowers who refinance their mortgage will enjoy interest rates reduction by 0.75% on the least. With this reduction, they can have some extra dollars every month. If these borrowers refinance their mortgage, they can save $284 on average every month.
With these figures, it is an excellent time to consider refinancing your mortgage if you have not made a move already. Some homeowners who have seen this advantage have already refinanced their mortgages. You need a strong credit history to enjoy the reduced interest rate that comes with refinancing your mortgage.
Specifically, it is a good time for you to refinance your mortgage if your current rate is more than 4.10%. The rates for qualified borrowers have been around 3% at most. If you can reduce this rate by 1% or 0.5% at least, you should start the refinancing process.
If you successfully reduce your interest rates by a percentage, you will save over $1,000 per year. You may even save up to $2,000 annually.
Refinancing your mortgage can afford you a lesser term
If you have a 30-year fixed-rate loan, refinancing can afford you a better option if you so want it. For instance, you can decide to refinance your mortgage and get a 15-year term rather than a 30-year term.
If you have an additional source of income, salary increase, or your finances improve through any means; you can have a faster payment term. If you refinance your mortgage into fewer years, like 15 years, you will pay the money faster. This move will also help you pay lesser interest.
It is a good time to refinance your mortgage to attain a break-even point in less time
If you have done your calculations and refinancing will not cost you too much, and you can break even in a short while, it is a good time to refinance your mortgage. When you consider the closing cost of refinancing, including the application, appraisal, and other necessary costs, and you are okay with it, then you should refinance. These essential processes will take up to 5% or thereabout of the loan you are refinancing.
When you divide the cost of going through these processes by the monthly savings from refinancing, you will get the number of months you will have to get back the expenses before you start saving from your new mortgage. If breaking even takes you less time and you are satisfied with the time, it is good to refinance your mortgage.
It is a good time to refinance your mortgage if your present mortgage terms and interest rates are not favorable. It is also an excellent time for you to consider refinancing your mortgage if you are more financially buoyant and can pay off the loan in a shorter time.
Refinancing your mortgage requires some thoughtful calculations. If you calculate the cost of going through the entire refinancing process and breaking even and have a favorable result, then refinancing is great for you.