If you own a home and have a mortgage, you may have heard about refinancing. Refinancing your mortgage means replacing your current mortgage with a new one, often with different terms, in order to save money, lower your monthly payment, or access your home’s equity. Refinancing can be a smart financial move for right reasons.

 

Below mentioned are some factors that you need to consider to determine if refinancing is right for you

  • Loan Term

Refinancing can also allow you to change the term of your mortgage. For example, you might refinance from a 30-year mortgage to a 15-year mortgage to pay off your home faster and save on interest. On the other hand, if you’re struggling to make your monthly payments, you could refinance to a longer term to lower your monthly payment. But, keep in consideration that changing your loan term could also affect your interest rate, overall costs and monthly payments.

  • Credit Score

Your credit score plays a significant role in whether you can refinance your mortgage and what terms you’ll be offered. If your credit score has improved since you first obtained your mortgage, you may be able to refinance at a lower interest rate or better terms. On the other hand, if your credit score has gone down, you may not be able to qualify for a refinance.

  • Interest Rates

One of the most common reasons people refinance their mortgage is to take advantage of reasonable interest rates. If the interest rates have reduced since you took out your first mortgage, refinancing could allow you to lock in better rates which can save you money over the life of your loan.

  • Home Equity

If you have enough of the built-up equity in your property, you may be able to access it through a cash-out refinance. Cash-out refinance can be a good way to access funds for home improvements, debt consolidation, or other expenses. Remember that a cash-out refinance will might increase your overall debt and could extend the time it takes to pay off your mortgage.

  • Closing Costs

Just like any other mortgage, refinancing comes with costs, including closing costs and fees. It is vital to take into consideration whether the savings you’ll earn from refinancing your mortgage will offset those costs or how long it will take to recoup those costs. Before making any decision, make yourself familiar with the costs involved.

In conclusion, refinancing your mortgage can be a smart financial move in certain situations but it depends on individual financial situation and goals. One must do their due diligence or get in touch with a mortgage professional like Sure Loan For You before making a well-informed decision.

Posted in Refinance Mortgage