The question of whether or not you should refinance your mortgage can be a difficult one to answer.
On one side of the argument, you know that there are many benefits (more on this below) to take advantage of.
Conversely, it’s a tedious process that doesn’t benefit every homeowner in the same way.
With this in mind, you must address a few key details before you determine if now’s the best time to refinance your mortgage. Here’s where you should start:
1. Your Current Mortgage
Don’t go too far down the refinancing path until you understand the finer details of your current mortgage. This starts with answering questions such as:
- What is your remaining balance?
- What is your interest rate?
- How many years are left on your loan?
If you already have an industry low interest rate, you’re not likely to qualify for one that’s any better.
Just the same, if you only have a few years left on your mortgage, you probably aren’t in position to save much—if any—money through a refinance.
2. Refinance Rates
The primary reason to refinance your mortgage is to lower your interest rate as to save money on a monthly basis, as well as over the term of your loan.
Compare refinance rates to your current rate. From there, calculate your savings to determine if it makes sense to follow through.
Tip: consult with a mortgage broker who specializes in refinancing. They can shop around to ensure that you get the lowest possible rate.
3. The Time it Takes
It’s not always easy to refinance your mortgage. In fact, it can take a lot of time, and that may not be something you have.
Even though your lender will make the process as simple and straightforward as possible, there are sure to be questions and concerns that come to light.
For example, a home appraisal is necessary, which takes time to schedule and complete.
Just the same, keep in mind that the process doesn’t unfold overnight. It can drag on for many weeks or months until you finally reach your closing date.
Note: along with the time that it takes to refinance your mortgage, there may also be closing costs. This is something to discuss with your lender upfront, as you don’t want any surprises down the road.
Final Thoughts
The decision to refinance your mortgage isn’t one to take lightly.
Maybe you find that this is a great way to save money and/or give yourself a greater sense of financial security.
But perhaps you realize that it would be in your best interest to look for other ways to improve your financial circumstances.
Regardless, the opportunity is there and the choice is yours.
Have you refinanced your mortgage in the past? Why did you make this decision? Were you happy with the benefits?
