3 Tips to Know When to Refinance Mortgage
If you feel you are paying too much on your mortgage, you always have the option to refinance your mortgage. The problem many homeowners fall into is when they should refinance. The interest rates go up and down with no signs of stopping. Always remember the mortgage you have for your home is your key to owning your property for the rest of your life. When used properly, your refinanced mortgage can help you to pay the least amount of money while maintaining ownership of your property.
Refinance before Your Credit Changes
The process of obtaining a refinance mortgage is not as strenuous as obtaining the initial mortgage. While you will still need to go through a credit check process, you will not need to go through nearly as much paperwork with the bank. This is why it is highly important to get the refinance loan you want while you still have good credit. If you know you are going to have an issue or additional items on your credit, you should take action right away. You may not be able to get the loan you want or the interest rates you want to have if you wait until the time feels right.
Watch Changes in the Interest Rates
The main point of the refinance loan is to take advantage of lower interest rates you can get involved in. This is mostly something which interests those who have a fixed rate mortgage. As the interest rates drop, you may be encouraged to try to lower how much you are paying for your mortgage by getting a refinance. You can find out the interest rates by watching the evening news, reading the newspaper, or by looking them up online. Your mortgage broker can also give you the latest interest rates if you ask. These interest rates are based on prime loans given to those with extremely good credit. However, when the rates are low, it lowers all of the rates given to those with less than perfect credit as well. Just do not expect to get the rates mentioned unless you have stellar credit.
Get a Refinance Loan Sooner Rather than Later
One thing to keep in mind when you are going through a refinance mortgage loan process is that you will have to pay closing costs. These are not as high as when you are getting the initial mortgage loan, but they are still pretty high. You will need to do the math about how much you will save in a given period of time. If you are not able to save more money than your closing costs, it does not make any sense to get the new loan. To figure out if taking on the closing costs makes sense, figure out what the difference will be in your interest rate over the remaining life of the mortgage. If the difference in the interest rate is not greater than the closing costs, it does not make sense to get a refinanced mortgage. Your mortgage broker can advise you further.