Taking out a refinance home mortgage loan, which is a new loan that replaces your existing loan, can be a smart move. You may end up with lower monthly payments, a lower interest rate, receive some of the equity in your home as cash that you can use for any purpose, or you could shave years and thousands of dollars off the total amount you’ll pay. However, nobody wants to refinance at the “wrong” time.
Every situation is different, so you will want to talk to a mortgage loan specialist to discuss your goals. However, in general, here are five signs that it might be time to consider refinancing your home mortgage loan:
1. Your Existing Payments are Too High
If you need to find some extra wiggle room in your monthly budget, refinancing your mortgage may help you lower your monthly out-of-pocket housing expenses. If interest rates have gone down since you originally took out your loan, you may even be able to switch to a shorter duration loan while paying less each month. Your mortgage professional can help you evaluate your options.
2. Interest Rates Have Gone Down
Interest rates change regularly. If they have gone down since you took out your original mortgage, refinancing may save you thousands of dollars in interest payments in the long run. Of course, you should evaluate the cost of refinancing, including closing costs and points, when determining whether it makes sense to refinance.
3. Your Credit has Improved
Even if interest rates themselves have not changed significantly from when you took out your original mortgage loan, you may still be able to shave years and thousands of dollars off your mortgage by refinancing if your credit profile and score have improved since that time. Your interest rate is based, in part, on your credit profile. So, better credit means you may qualify for a lower rate.
4. You Want to Stop Paying PMI
If you put less than 20% down when you bought your home, you may be paying private mortgage insurance (PMI) every month. PMI is required insurance that protects lenders from borrower default. If your equity in your home has risen (or if home values have risen), you may be able to refinance and do away with your PMI payments.
5. You Want to Tap into the Equity in Your Home
If the equity in your home has gone up, refinancing your home loan through a cash-out refinance can give you cash you can use to make home improvements, pay down other debts or use for any purpose.
When You’re Ready to Refinance, Choose BrightPath
There are many reasons you might want to consider a refinance home mortgage loan. BrightPath offers a variety of loan products and resources to help homeowners make smart refinance decisions.
To learn more, call us anytime at (888) 222-6003, or chat with an agent on our website, or fill out our easy online contact form.