Refinancing – When Should I Refinance?
When mortgage rates fall, many homeowners refinance their loans. While refinance activity goes up, that doesn’t mean it’s always the best move. Knowing when to refinance your mortgage is key.
When is it a Good Idea to Refinance?
Generally, if refinancing will save you money, help you build equity and pay off your mortgage faster, it’s a good decision. Consider refinancing if you can lower your interest rate by one-half to three-quarters of a percentage point — this can substantially lower your monthly payment.
Make sure your total monthly savings offset the cost of refinancing, however. It may not be a good idea if you plan to move in the next two years, which gives you little time to recoup the cost.
Your financial goals, how long you plan to stay in your home, how much equity you have in the home and your overall financial condition are important considerations when it comes to refinancing.
Is Refinancing Worth It and How Does Refinancing Work?
There are several ways to refinance your mortgage. Finding the right loan depends on your goals. You may want to switch from an adjustable-rate mortgage to a fixed-rate loan that has a steady monthly payment, or you may want to shorten the term of your loan from a 30-year to a 15-year and save yourself from extra interest charges.
Many homeowners go for a straight rate-and-term refinance that lowers their interest rate and gives them a secure repayment term. Some want a lower monthly payment to free up money for other expenses, like college funds or investment properties.
How Long Does it Take to Refinance a Mortgage?
The time it takes to refinance depends on your lender as well as how long it takes to complete inspections, appraisals, credit checks and other requirements. Many lenders’ websites allow you to read about different loan products, compare interest rates, fill out loan applications and submit documents.
If you’re unsure about refinancing, your local realtors are often some of the best people to ask! Real estate agents are knowledgeable in many aspects of home-buying and refinancing. Coldwell Banker Carroll Realty in Panama City, Panama City Beach and 30a is ready to answer any questions you may have! Contact our local realtors today.