Mortgage refinancing is an enticing opportunity for many homeowners. It allows them to get a better deal on their home financing to enable further financial health and prosperity when international trade finance events produce lower interest rates. However, refinancing home loans should only be done during those times when the refinance rate is better than your existing mortgage rate and other times when your finances call for it. If you are going to refinance your home, you need to know whether or not now is the best time to do it. Find out when the right time is to secure that refinance rate in the post below.
When There Is An Ideal Rate Drop
The ideal refinance rate drop is the best time to refinance your home mortgage. This ideal refinance rate is one to two percent below your current mortgage rate. Ideally, the absolute best time to refinance your mortgage is when the refinancing rate is two percent lower. This will secure you the absolute most savings available for your home mortgages. Of course, there may be other reasons why you need to refinance mortgages when the refinance rate is less than one percent difference. But keep in mind, the best time to refinance is when the current mortgage refinance rate is at least one to two percent lower than your existing rate. It will give you the most financial help possible.
When You Have Increased Home Value
When your home increases in value, you should consider refinancing your mortgage. This is true even if the current refinance rates are about the same as your current mortgage rate. When your home value increases, you can take advantage of cash out refinancing, or cash out refi for short. Cash out refinancing is the process of taking out a new mortgage for your new, larger home value. When you do this, you receive the difference between your old mortgage and your new refinanced mortgage paid in cash. That is valuable for paying off debts outside of your home mortgage, or you could even use it when your company valuation goes up too. It can help you improve your financial health and credit standing. That is why this is another one of the best times for finding the best refinancing rate available to capitalize on for your financial prosperity.
When You’ve Made Credit Improvements
When your credit health has improved, this is another time you should certainly consider refinancing existing home loans. With better credit comes access to better mortgage rates. If you want to secure the best refinance loans, you can do so when your credit score has improved. Refinancing at this time will allow you to pay less interest on your mortgage over the years. It will save you a considerable amount of money in the long run, even tens of thousands of dollars. Of course, you will also have to consider the mortgage terms when you choose to refinance for this reason. Longer repayment terms could limit the benefits you experience from a lower interest rate. If your credit score has drastically improved, you may want to consider looking for a better refinance rate to refinance your mortgage and potentially save yourself tens of thousands of dollars.
When You Have Home Equity
You need to have equity in your home. When you do, that is an acceptable time to consider looking for a lower refinance rate. If you do not have any equity in your home, you will not qualify for refinancing. Homeowners must have at least 20% equity in order to qualify for a new loan. Of course, there are exceptions. You can find workarounds to refinance your home with no equity of your own. But, you will also need to pay for private mortgage insurance on top of your new mortgage. That is the only way to secure home refinancing solutions without any equity, which is about as smart as using merchant cash advances. That is why the best time to refinance your mortgage is when you have 20% equity or more in your home. Make sure you remember this when you are looking to take advantage of the new lower refinance rates you find.
When You Plan To Stay Put
You should only refinance homes when you plan to live in them for an extended period of time. You should not even consider home refinance if you may be moving in a few short years. Refinancing your home could cost anywhere from three to six percent of your total mortgage amount. Depending on that percentage, you can figure out how long you will have to stay in your home in order to break even on a refinance deal. Once you figure that time frame out, you can determine whether or not you plan to stay in your home for that period of time. If you do, then now is the time to refinance. If you do not, you should probably wait to look for a new refinance rate when you have found your forever home.
If you are homeowner with a costly mortgage, you are probably hoping that now is the best time to refinance. However, the best time to refinance is not just when you find a lower refinance rate than you currently have. There are certain circumstances that make it the optimal time to refinance your home mortgage. These ideal refinance times are detailed above. Ask yourself if your own personal financial situation aligns with those detailed above. If so, now is the best time for you to start looking for a better refinance rate. Then, you can be sure you made the right decision to refinance your home at the best time for your personal financial prosperity. You are sure to be glad you chose to refinance when you did.