Deciding whether or not to refinance your mortgage can be a very tricky thing. And what it really boils down to is you and your personal financial situation. If interest rates are now lower than they were when you got your mortgage, refinancing can be a smart move. Or, if your financial situation has changed since you purchased your home and you think a rate change will result in a mortgage payment you can’t afford, consider a refinance.
When deciding to refinance you should consider how such a move will improve your current situation. Try talking to a professional so they can show you how refinancing your home can help save some money every month on your payments. Refinancing your home is really about timing. For best results you have to do it at the right time. The right time is determined by current interest rates.
Over the last few years interest rates have been pretty level due to the amount of time it has taken to sale homes. But at this point the economy is in recovery mode. Things are without a doubt getting better. As a result the interest rates for both new and existing homes will be on the rise. As more people buy homes, the interest rates will increase. Its all about supply and demand. So before interest rates shoot up to high, you should determine if you want to move forward with a refinance.
One thing you should understand is lenders have tightened the requirements for getting a home loan. So those whose credit has suffered because of the credit crises may find it very difficult to get the money they need to buy a home. Lenders don’t have a lot of wiggle room. They will look at your credit and if it doesn’t meet their requirements you will be denied. That’s why it is so important you loo over your credit before you go to a lender trying to refinance your mortgage.
Take the time to clear up any issues you may have. Start paying your bills on time every month. Doing so will help you qualify for a lower interest rate when you refinance your home.
When you are looking to refinance make sure you sit down and compare the old loan with the new loan. You want to make sure it is a better deal than what you already have. If there isn’t a significant reduction than its probably not worth it. I suggest speaking with a professional so they can help you navigate through this process as there is a lot you need to consider.
For example, one of the most important factors to consider is the payment terms of the loan. If you have a 20 year mortgage and have been paying on it for 10 years that means you only have 10 years left. If you go out and refinance for another 20 years you will be adding more interest to your loan. So in this case it wouldn’t be worth. That’s why its best to speak with a professional. They will be able to guide you in the right direction.