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Refinancing Your Home — Is Now The Right Time?
3-Minute Read
Refinancing
Common reasons people might decide to refinance their mortgage could be to lower their monthly payments, shorten the term — or length — of the loan or tap into their home equity to consolidate debt or pay off other expenses. As market conditions change, understanding the various factors that might influence your decision to refinance and knowing the types of options available are key.
When Should You Refinance?
Just like buying a home, timing can be everything — but how can you prepare for when that time comes? With the help of tools such as a refinance calculator, you can better understand potential savings and visualize the impact of different rates and terms. This can also help you assess whether a refinance might make sense based on your financial goals and situation.
Another important aspect to consider is the break-even point, which indicates when the savings from obtaining a lower interest rate will likely outweigh any costs associated with refinancing your home loan.
What Are The Requirements For A Refinance?
Refinancing your home loan likely requires some unique things that differ from what may have been required when you purchased your home. Some refinance loans might have a seasoning period, which means you typically need to have had your existing mortgage for a specific time — often a minimum of 6 months — before a refinance is allowed. Other refinancing options may require a lower loan-to-value-ratio or a certain level of equity in your home.
What Refinance Is Right For You?
To decide what the ideal refinancing option is for you, it's important to know what your goals are. Is your focus on accessing cash, lowering your monthly mortgage payments or maybe consolidating your debt from higher interest rate credit cards or student loans? Identifying the right strategy is all about understanding your priorities.
A rate and term refinance can lead to a lower interest rate, different loan term or both, which typically results in a lower monthly payment. Even a small percentage dip in interest rates could mean serious savings over the life of your loan.
With a cash-out refinance on the other hand, you can usually access the equity you have built in your home to help with other financial obligations, such as funding home renovations or paying off credit card debt or student loans.
What's The First Step You Can Take For Refinancing?
A great resource for any home financing questions or needs is your local independent mortgage broker. Unlike retail lenders and banks, a broker has access to a variety of loan options with competitive rates from multiple lenders, making it more likely for them to be able to secure the ideal option for your specific situation. Additionally, they are able to move the loan process along incredibly fast — and who doesn't want to start saving money sooner?
Mortgage brokers are licensed home loan experts who act as your personal advisor, providing invaluable support and service throughout the process, which not only makes the experience smoother but can also make refinancing your home more affordable, ultimately putting more money back in your pocket.
No matter what your home loan refinance goals are, a mortgage broker can guide you toward the next steps. Find an expert in your area on Mortgage Matchup!