When you refinance a mortgage, you receive a new loan that replaces your existing loan to give you more benefits. Some of these benefits can include lower monthly payments, receiving some equity as cash, a lower interest rate, and taking years and money off the total amount of the loan you’ll pay. Needless to say, refinancing a mortgage can be a good thing.
However, it’s important to refinance a mortgage at the right time. Since everyone has a different situation, you want to talk to a mortgage loan specialist, like BrightPath, to help you accomplish your refinancing goals.
To get you started, here are a few signs to show you it might be the right time to refinance your mortgage:
Interest Rates Have Gone Down
Since interest rates are changing regularly, there’s a good chance they’ll go down in the future which means you want to take advantage of this time to refinance your mortgage into one that helps you financially. If the interest rates have gone down since you took out your original mortgage, refinancing can save you thousands of dollars in interest payments over time.
No matter what, it’s important to evaluate the entire cost of refinancing including closing costs to determine whether it makes sense to refinance. That’s why it’s important to consult an experienced mortgage professional to determine if refinancing for a better interest rate will benefit you overall.
Your Monthly Payments Are Too High
If your monthly payments are causing you to struggle, refinancing your mortgage can help you lower your payments to something more affordable. If the interest rates have gone down since you took out a loan, you may be able to get a shorter duration loan while also paying less each month. At BrightPath, our mortgage specialists can help you determine the best option for your financial situation.
Your Credit Score Has Improved
Sometimes the interest rates haven’t changed. This doesn’t mean it’s still not a good time to refinance a mortgage. You may be able to take years and thousands of dollars off your mortgage by refinancing if your credit score has improved since you first applied for your loan. Part of your interest rate is based on your credit score, so with a new and improved credit score, you may be able to qualify for a lower interest rate.
You Need to Take Care of Debt
If the equity in your home has gone up, refinancing your loan through a cash-out refinance allows you to take that extra equity in cash to use toward any debts. This is also a great option if you have any major home improvements on the horizon. When you get a cash-out refinance loan, your new loan amount is much more than your previous mortgage. This way, at closing, you get the difference between the two amounts as cash so you can spend that cash however you want to.
Talk to a Specialist About the Right Time to Refinance a Mortgage
At BrightPath, we want to help you find the right time to refinance your mortgage to one that better suits your financial situation and lifestyle. Contact us today to learn more about the best time to refinance and let us help you find out which refinance option is the perfect fit for you!
