How to Decide If It’s The Right Time to Refinance Your Home
There are many reasons why refinancing your Home may be the right decision for you. If you’re looking to take advantage of historically low interest rates, consolidate debt, or free up cash flow, then refinancing is worth considering. Maybe you need a change in scenery and would like to move into a new neighborhood. There are so many benefits that come with refinancing your home.
Will You Live in Your Home Long Term?
Ask yourself if you’re planning on staying in your home long enough to recoup the closing costs and prepaid expenses associated with refinancing.
Do You Have a 20% Down Payment?
If not, then refinancing may be more expensive because of the additional costs of an FHA or VA loan.
What Is Your Interest Rate?
Take a hard look at your current interest rate. If it’s lower than what you can refinance for, then there may be value in doing so. With a service like American Financing, you can refinance a home for a fixed rate as low as 4%. It’s time to compare rates and see if it is the right time to refinance your home.
Do You Have a Good Credit Score?
Look at your credit score and make sure you brush up on all of the requirements to get a better rate. Refinancing is not always an option for everyone, so it’s important to know what will be required before making this decision.
How Much Will You Save?
Calculate how much time and money you can save by refinancing: lower interest rate, lower monthly payment, and the possibility of lowering your property taxes. Look at all costs associated with refinancing too. You will need to pay closing costs (which could be rolled into your new mortgage) as well as prepaid expenses like homeowners insurance and PMI. Make sure you can afford these payments before making a decision. Also consider the additional monthly payment that will come along with refinancing. You’ll need to make sure you can afford them before signing anything. Ask yourself if there’s anything you can pay off to lower your debt ratio and improve your credit score, which will lead to a better interest rate If you’re refinancing to take advantage of historically low rates, make sure that it makes sense financially. Rates may not stay this low forever.
It goes without saying: if you’ve never done any home improvement projects on your home, then now may not be the right time to refinance your home.