Signs That Indicate If It Is A Good Time To Refinance Your Mortgage!
Last Updated on February 10, 2023 by Admin
Are you in the middle of a financial crisis due to increasing monthly expenses and payment of loan EMIs? Have you considered refinancing your mortgage to pay the loan amount on lower interest rates? If not, this is a sign for you to start exploring if it is now a good time to refinance my mortgage. However, before going for mortgage refinancing, it is essential for us to understand how much you stand to save and how much is the refinancing cost. In ideal situations, individuals choose to refinance to save money on interest rates both long and short term and long term. Refinancing your mortgage also helps the borrowers to reduce the monthly payments and save money for other financial emergencies.
What is mortgage refinancing?
Mortgage refinancing is a financial procedure that involves replacing your existing mortgage with the new one that has different terms. One of the most popular refinancing terms that are pulling the audience towards it is lower interest rates on the new mortgage. Furthermore, the borrowers can also choose to get a fixed-rate mortgage instead of an adjustable-rate mortgage or vice versa.
When is the right time for mortgage refinancing?
Before opting for mortgage refinancing, the borrower must carry out third market research with the help of a financial advisor. This is primarily done to analyze whether the interest rates in the market are suitable enough and can prove to be profitable to go for refinancing. Here are some of the common signs which indicate that mortgage refinancing is the right choice for you:
1. Lowered interest rates
Although there are no standard marks that determine what interest rate reduction is worth giving a shot. However, using the home mortgage refinance calculator, you can calculate how much you would save based on the current and next interest rates. If the interest rates of your existing mortgage are lower than the one you are getting after refinancing, mortgage refinancing, in that case, will be a bad idea. On the other hand, if you witness A Drop in the interest rates by 0.5 % to 1.2 %, it indicates that the borrowers can save a significant amount of money after mortgage refinancing.
2. Pay off the mortgage quickly
Refinancing your mortgage also allows the borrowers to shorten their mortgage term and pay off the mortgage quickly. Shortening the long-term helps the borrowers to pay low-interest rates that too for fewer years and save a lot of money. Although reducing the term of the loan increases your monthly payments, it can prove to be profitable in the long term. Thus, having a stable source of income for multiple income sources can smoothen the mortgage refinancing process and let you get off the mortgage burden quickly.
It is advisable to work with a reputable and well-experienced financial advisor to determine whether you can comfortably afford the high monthly payments post refinancing. After conducting thorough research regarding your expenses and financial situation and getting in touch with Preferred Rate, make a wise decision regarding mortgage refinancing.
