When to Refinance Your Home Loan

The when to refinance your home loan question is one that is often asked by homeowners. There are many factors to consider when making the decision to refinance your home loan. In this blog post, we will explore some of the most important factors to keep in mind when making the decision to refinance your home loan.

Checkout this video:

Introduction

Are you wondering when to refinance your home loan? Here are some things to consider that may help you decide if now is the right time.

Refinancing your home loan can save you money in several ways. It can lower your monthly payments, reduce the term of your loan, or get you a lower interest rate.

You may be able to lower your monthly payments by refinancing to a loan with a lower interest rate. You may also be able to reduce the term of your loan, which will save you money on interest over the life of the loan. Or, you may be able to do both!

When considering whether or not to refinance, there are a few things to keep in mind. First, you’ll want to make sure that refinancing will save you money. Second, you’ll need to consider how much equity you have in your home. And finally, you’ll need to decide if now is the right time for you, based on current interest rates and your personal financial situation.

If you’re interested in refinancing your home loan, contact a mortgage lender today for more information.

When to refinance

If you’re considering refinancing your home loan, there are a few things you need to take into account. When you refinance, you’re taking out a new loan to replace your current mortgage. This means you’ll have to go through the entire loan process again, including getting approved for a loan, closing costs, and so on. You’ll also need to consider the current market conditions and interest rates.

When interest rates are low

If you’re able to lock in a lower interest rate than you currently have on your home loan, it could lead to significant savings over the life of your mortgage. A 0.5% interest rate decrease can net you a savings of more than $28,000 over the life of a 30-year fixed-rate mortgage.

When you have equity in your home

Homeowners with equity in their home may want to consider refinancing their mortgage. Equity is the portion of your home’s value that you own outright, or have paid off. For example, if your home is worth $250,000 and you owe $150,000 on your mortgage, you have $100,000 in equity.

Depending on the type of loan you have and the current interest rates, you may be able to save money by refinancing. When you refinance, you take out a new loan with a lower interest rate and use the money to pay off your old loan. The difference in monthly payments can add up to substantial savings over time.

If you’re thinking about refinancing, there are a few things to keep in mind:
-The amount of equity you have in your home – The more equity you have, the easier it will be to refinance and the more options you will have.
-The current value of your home – If your home has decreased in value, you may still be able to refinance but you may not have as many options available.
-Your credit score – A higher credit score will give you access to better loan terms.

When you have a good credit score

A good credit score is usually defined as a FICO® Score of 670 or higher.1 Having good credit often gives you more options and can help you qualify for the best terms and lowest interest rates on a mortgage refinance. If you don’t have good credit, there are still options available to you, but your choices may be more limited.

When you want to shorten the term of your loan

If you’re happy with your current monthly mortgage payment but want to pay off your home loan faster, you may want to refinance to a shorter-term loan. Shortening the term of your home loan from 30 years to 15 years will obviously result in higher monthly payments, but you’ll wind up paying much less in interest over the life of the loan. In most cases, you’ll also build equity in your home faster with a 15-year refinance than with a 30-year mortgage.

How to refinance

Research lenders

Comparing offers from multiple lenders is the best way to ensure you get the best rate and terms for your refinance. And shopping around is easy with Credible. We’ll pre-qualify you with multiple lenders in just a few minutes. Plus, we have a tool that allows you to compare multiple refinancing offers side-by-side.

You can also check out our rates for yourself below:

Compare rates and fees

When considering a refinance, compare mortgage rates and fees from several lenders. Check to see if you’re eligible for any government programs that offer refinancing incentives.

Get rid of private mortgage insurance.
If you put less than 20 percent down when you purchased your home, you’re probably paying for private mortgage insurance (PMI). If your home has increased in value and/or you have plenty of equity, you may be able to cancel PMI.

Get a shorter loan term.
One way to lower your monthly mortgage payment is to choose a shorter loan term — a 15-year mortgage instead of a 30-year mortgage, for example. Of course, you’ll pay more each month, but in the long run, you’ll pay far less in interest and build equity in your home much faster.

Make extra payments when possible.
Whenever you have extra cash — windfall from a bonus at work or money left over after paying your regular monthly bills — consider making extra payments on your principal balance. Even a few hundred dollars can make a difference over time.

Apply for a loan

Many people choose to refinance their home loan in order to consolidate their debt, or take advantage of a lower interest rate. Before you apply for a loan, it’s important to understand the process so that you can be prepared.

When you refinance your home loan, you are essentially taking out a new loan to replace your existing mortgage. The new loan will have different terms and conditions, which may include a lower interest rate, or a different repayment period.

To apply for a loan, you will need to provide some personal information, as well as information about your finances and employment history. You will also need to have your property valued so that the lender can assess how much equity you have in your home.

Once you have gathered all of the necessary information, you can begin the application process. The first step is to find a lender who is willing to offer you a loan. You can compare lenders online, or speak to a mortgage broker who can help you find the best deal.

Once you have found a lender, you will need to fill out an application form. This form will ask for information about your personal circumstances, as well as your financial situation. Once you have submitted your application, the lender will assess whether or not they are able to offer you a loan.

If your application is successful, the lender will then provide you with a contract outlining the terms and conditions of the loan. It is important that you read this contract carefully before signing it, as it will outline your obligations as a borrower.

You should only sign the contract if you are happy with the terms and conditions of the loan. Once you have signed the contract, the lender will arrange for the funds to be paid into your account and your old mortgage will be paid off.

Conclusion

If you’re considering refinancing your home loan, there are a few things you need to take into account. First, you need to determine if refinancing will save you money in the long run. This includes taking into account the fees associated with refinancing as well as the interest rate you’ll be paying on your new loan.

You also need to make sure that you’ll be able to comfortably make the monthly payments on your new loan. Keep in mind that refinancing can extend the term of your loan, which means you could be making payments for longer than you originally anticipated.

Ultimately, whether or not refinancing makes sense for you will come down to a complex combination of factors. However, if you do your research and carefully consider all of the pros and cons, refinancing could save you a significant amount of money over the life of your loan.

Scroll to Top