Refinancing My Mortgage: When You Should and Shouldn’t
The thing about securing a home loan is that they usually play out over several decades. There’s so much that can happen in that time. Factors like interest rates can change a great deal even within a year span, let alone 20 to 30 years. If you’re in this position, you may find yourself asking, “when should I pull the trigger on refinancing my mortgage?”
There are some noticeable trends to follow that will let you know when it’s time. To ease the daunting nature of this, your friends at LeapFrog have put together a comprehensive list to reference. Read on to learn more.
As stated, a lot can change over time. It’s almost a guarantee that the specs of your mortgage will no longer be as favorable as time presses forward. It’s always good to stay aware of the trends in housing and interest rates. That way you’ll know if your deal is actually in need of a touch up.
So what exactly does it mean to refinance your home loan? It’s a fairly intricate process of taking out a new loan to pay the old one off. From there, you proceed with making payments on the new loan. There’s no real limit to the amount of time you can do this, though it’s unlikely a lender would want to go this route until the new loan is at least 3 months old, give or take. Also, take note of any fees your lender may charge for breaking the loan agreement prior to its finish.
Reasons To Move Ahead With Refinancing
Changing interest rates are likely the main reason for wanting to refinance. For example, if you secured a 30 year loan in the 90’s, your interest rate was in the double digits. But by the turn of the century, rates had gradually lowered to single digit. Refinancing can help get the strain of that higher rate off your back.
Even taking a few years off of your original loan can save you massive amounts of dividends. But to reiterate, make sure you’re fully aware of any penalties that your lender will impose in the event of early loan payoff. This will ensure you’re not actually paying out more by making the choice.
Lightening Your Homeownership Load
Maintaining a house month to month can feel like a full time effort.
And if your monthly payments are particularly high, your monthly payment can be a true chore. Refinancing gives you the opportunity to lighten that monthly load moving forward.
Another beauty of refinancing your loan is that you aren’t necessarily beholden to the type of loan you currently have. You can entertain other mortgage variations; but again, you’ll want to take note of all financial requirements to make an informed decision.