When should you refinance your home? When it makes financial sense, of course! But with so many options out there, it can be hard to know which route to take. This guide will walk you through the ins and outs of home refinancing so that you can determine whether it's right for you at this time in your life or not.
Is Now a Good Time to Refinance?
Refinancing your home can seem like an attractive option when you're looking to reduce your monthly mortgage payments or perhaps even pay off your home early. A better question to ask may be when is a good time to refinance my home, as it depends on several factors. If you are underwater on your mortgage (owe more than your home is worth), then now may not be an excellent time to refinance. Unless you can come up with more money (either through savings or equity), then you won't save money over refinancing at a later date. Some homeowners find that there aren't many savings after taxes and closing costs have been factored in, even if you have equity in your home. Before deciding whether or not it is an excellent time to refinance, consider each of these factors whether you should refinance your home.
Understanding Interest Rates
Lending conditions have been, to put it mildly, rather lax in recent years. If you're considering refinancing your home—or you've already made up your mind to do so—there are a few key factors that you should take into account to decide if now is an excellent time to refinance. For example, low-interest rates mean that mortgage rates are cheaper than five or ten years ago; however, high home prices and tighter lending standards may make it more difficult for some people to qualify for a new loan. Plus, refinancing can still carry costs and risks even with interest rates lower than usual and home prices on an upward trajectory (at least for now).
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