WHEN TO REFINANCE

 If your situation and market conditions are optimal, refinancing can be a beneficial move. When you refinance, you are paying off one loan with the proceeds from a new loan, using the same property as security. The average homeowner refinances every four years, most often to take advantage of lower interest rates, but there are many other reasons to refinance.

Improved Credit Rating
When you initially applied for your mortgage, you had little credit or maybe a couple of blemishes on your borrowing record. Your credit score would have been a big factor in determining the interest rate on your mortgage. If you had a mediocre or low score that has improved, you could be eligible for a better rate.

Rising Interest Rates
If you have an adjustable-rate mortgage and expect interest rates to rise, you may want to switch to a fixed-rate loan. By locking in the interest rate, you won’t have to worry about payments rising in the future. On the other hand, if you already have a fixed-rate mortgage and interest rates are on the rise, you are in good shape.

Salary Increase
When you refinance, it’s not always about lowering your monthly payment. Perhaps you’ve received an increase in pay or your spouse has returned to the workforce. You could put that extra income towards your mortgage. Consider switching from a thirty to a fifteen year amortization. It will pay off faster and save you several thousand dollars in interest payments.

Refinancing can be a smart move. Be sure to speak with your lender and check current market conditions to make sure it is the right move for you.