Refinancing your mortgage can potentially help you to save money. However, in order for refinancing to be as cost effective as possible, you need to refinance at the right time. Here are five signs that could indicate it's time to refinance your mortgage:
Sign #1. Better Interest Rates Are Available.
Industry experts predict that the age of the ReFi boom might have transitioned to refi boomlets. These boomlets could lead to lower interest rates, and, when it comes to refinancing, interest rates play a huge role in how much money you will spend each month. For example, if your $200,000 mortgage has a 4.5 percent interest rate that is based on a 20 percent down payment over a 30-year loan period, then you will pay an estimated $810 per month. However, if interest rates dropped to 4 percent, then you could pay approximately $763 per month, which could equate to $564 in saving per year.
Sign #2. You Have Achieved A Better Credit Score.
If your credit wasn't good when you first applied for your loan, and it has since improved, then the time might be right to refinance. Refinancing when you have good or excellent credit will help you to have a better rate, lower your monthly payment, and save money on your mortgage. Remember that in addition to a high credit score, you want to have a low debt-to-income ratio, before you consider refinancing.
Sign #3. Your Adjustable Rate Mortgage (ARM) Is Going to Adjust.
ARMs are an attractive option because they typically have an initial fixed-rate period. However, after the initial fixed-rate period, you might discover that your interest rate is going to jump to current (or higher) market values. In this vein, many times homeowners will choose to refinance right before the initial fixed-rate period expires. If you are contemplating refinancing your ARM, then be sure to speak with your financial advisor to best determine what type of rate you could receive with a fixed-rate mortgage.
Sign #4. Additional Funds Are Needed.
Life happens, which means that unexpected expenses come up. If you suddenly need money for one of life's unexpected big expenses, then you might explore a cash-out refinancing opportunity. In layman's terms, a cash-out refinance will allow you to borrow more money than what you currently owe on your existing home. The difference between the funds that you borrowed and your total mortgage amount is given to you as available cash. Many times, cash-out refinancing is available with lower interest rates, which makes them a popular way to pay off renovation projects, medical expenses, or higher education costs.
Sign #5. Your Finances Have Changed.
If you need to pay less on your mortgage, then refinancing can be a good option to place extra funds back into your account. Whether you choose to extend the terms of your loan, or capitalize on a ReFi boomlet, there are several refinancing options that can help you to save a significant portion. Once again, a financial advisor can help you to make the right refinancing choices based on your current and anticipated future needs.
All Signs Point to The Best Maryland Title Company.
At Velocity Title, we proudly offer a streamlined settlement process that can help you as you explore your refinancing options. Thanks to our experienced staff, open lines of communication, and quick turnarounds—we can help you capitalize on the ideal refinancing opportunity. Don't delay. If all signs point towards refinancing, then contact a Velocity Title team member today, so that you can capitalize on the unique market opportunities that are yours for the taking.