3 Times to Consider Refinancing
With average mortgage interest rates in the United States consistently reaching historical lows, the word refinance is on the mind of homeowners across the country. Refinancing is a fantastic way for homeowners to save money on mortgage payments, improve their homes, and move closer to accomplishing financial and personal goals. But when should you refinance and get in on the savings?
Thanks to the seemingly endless buzz around refinancing, you might be wondering whether now is a good time for you to refinance, and the team at Local Mortgage would like to help you figure that out. For that reason, today’s blog post will cover three times to consider refinancing. If you would like to learn more after reading our post, then contact Local Mortgage to discuss your circumstances with one of our mortgage experts.
Your Credit Improves
Any homeowner that has gone through the mortgage process is probably aware that credit scores have a major impact on the financial details of a mortgage. If you had a below-average credit score and payment history when you bought your house, then your mortgage may have a high interest rate compared to similar mortgages taken out at the time. Of course, higher interest rates correspond to higher monthly payments, meaning that a low credit score can cost you money when you get a home loan.
Luckily, refinancing gives you a chance to change your interest rate and lower your monthly payment. When you apply to refinance, lenders will reassess your financial circumstances and offer you a loan that better reflects your current situation. Therefore, if you have improved your credit score since you took out your home loan, then it might be a good time to refinance and obtain a lower interest rate. Doing so will help you save money on your monthly payments. Just remember to consider the costs associated with refinancing to get an accurate idea of how much money you will save in the process.
You Want to Start a Home Improvement Project
One of the best parts of buying property rather than renting is getting the chance to build equity in your home. Equity is a powerful financial asset that improves your net worth and helps you establish a stable financial foothold. That said, home equity is not a very liquid asset, which means it can be difficult to actually utilize the equity you have built up thus far in your mortgage. Refinancing gives you a way to tap into that equity and use it for things such as home improvements.
Next time you imagine renovating your kitchen, adding space to your home, or improving your property in another way, consider a cash-out refinance option to pay for the project. While the size of your bank account may make it seem like you can’t afford to improve your home, you might not be considering your home’s equity. By refinancing, you can pull cash out of your home and make home improvements affordable.
Interest Rates Drop Below the Rate on Your Mortgage
Perhaps the single best time to consider refinancing is when the mortgage interest rates offered by lenders such as Local Mortgage fall below the interest rate on your home loan. Since interest rates have consistently fallen to new historical lows over the last five years, there is a good chance that you can refinance to a lower interest rate. Like we mentioned above, this is especially true if your financial situation has improved since your loan was originated.
Do you remember the interest rate on your mortgage? If so, then check the home loan interest rates from Local Mortgage and use our refinancing calculator to see how much you could save on refinancing. If our rates are lower than your current rate, then refinancing now could lead to savings on your monthly payments and make your mortgage more affordable. Consider reading our blog post on how to find good interest rates to learn more about how rates have changed recently.
Refinance With Local Mortgage
Hopefully today’s post has helped you understand some key times to consider refinancing your home loan. Explore our blog more if you would like to learn more about the basics of refinancing, discover different types of mortgage products, or get a better idea of how interest rates affect you. As always, feel free to give Local Mortgage a call to discuss any of your questions about home loans.