Although low mortgage rates is music to our ears, is it really enough for you to refinance? Here are some questions you can ask yourself to guide you in making the right decisions on refinancing.
How low do mortgage rates need to be?
Don't just compare between mortgage rates. See the savings between your current monthly payment and the projected refinance mortgage payment. Compare only the principle and interest payments on a loan amount that includes the closing costs, but don't include taxes, insurance, or cash out. There decide if the monthly savings makes it worthwhile.
Do need cash for personal use?
Did you know that if you refinance with a cash out, you can also receive money for personal expenses? Yes, you can! That's if you have equity in your home of course.
How about a fixed rate mortgage?
Having an adjustable rate mortgage has its benefits, rates can go amazingly low but it can also go staggeringly high. If you're planning to keep your home for a long time, having a fixed rate mortgage can provide greater savings overtime.
How about reducing the Mortgage term?
Refinancing a shorter mortgage term can greatly reduce the interest rate on your loan. Although your monthly payment will increase but the overall saving can be huge. In addition to that, you can increase your home equity much faster.
Source: Rick Smith/LoanDepot.com