Should You Refinance Your Home?
Refinancing can be quite appealing, especially given the current economic climate. When interest rates drop, a change of terms can mean reduced payments and an easing of the monthly debt burden. Refinancing can be a smart move, depending on your unique economic circumstances.
Here are a few factors to consider:
Existing Equity. If you’ve paid off over 10% of your mortgage, then it may be feasible to refinance.
Current Interest Rates. If current rates are a few percentage points below what you are now paying, then you may be able to save money in the long term. It is essential that you or an advisor calculate overall savings and costs before committing.
Payment History. Have you always made payments on time? Lenders will look to see that you have not been making late payments, especially over the past 12 months.
Credit History. Check your credit report and score and review for accuracy. If you have little outstanding credit card debt and a good credit score, you will be seen more favorably by the banks.
These are just some questions to ask yourself as you begin evaluating the prospect of mortgage refinancing. Lenders will be looking at these factors, among others, when determining whether you qualify and what rates they might offer you.
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