The Basics Of Refinancing Home Loans: Times To Consider It
When you buy a house, you commit to a mortgage payment that you will make every month for up to thirty years. Whatever payment amount you commit to doesn't have to be the payment you make the entire time, though. In fact, you might be able to reduce your payment or shorten the life of your loan by refinancing your mortgage. Refinancing your mortgage can be helpful in many different situations. Here's a look at a few of the times when you might want to consider home refinancing.
Have Interest Rates Dropped Since Your Loan Closed?
The interest rate on your home loan directly affects the amount of your monthly payment and the total amount that you will pay over the life of your loan. When you close on your mortgage loan, the interest rate assigned to your loan will be based upon a variety of factors, including the current market interest rate.
If interest rates have dropped a few points since you got your initial mortgage, it might be worthwhile for you to consider refinancing. By refinancing when interest rates have dropped, you can reduce your monthly payment and the total that you'll pay over the full life of the loan.
Has Your Credit Score Gone Up?
Your credit score is another factor when your interest rate is determined for your mortgage. The higher your credit score, the lower your interest rate will typically be. If you obtained a mortgage with a subprime credit rating or a moderate credit score, but your score has since improved with regular consistent payments, you may want to consider refinancing your mortgage to improve your interest rate and loan terms.
Did You Get An Adjustable-Rate Mortgage?
Another common time to consider home refinancing is if you've secured a home loan with an adjustable interest rate. In those situations, it's in your best interest to refinance your mortgage into a fixed-rate loan. You'll have a more consistent payment plan, and you won't have to worry about fluctuations in the market interest rate affecting your monthly payments. If the payment changes have left you struggling with your budget, talk with a mortgage lender about refinancing your loan into a fixed-rate option instead.
These are some of the times when it's in your best interest to look at home loan refinancing. Talk with a mortgage lender near you today for more help and information about refinancing options.