Refinancing your home loan can be beneficial to homeowners, however, it is important to know when it is the best time to refinance your loan. There are a number of factors you should consider before doing so and you should consult with your mortgage loan officer before you do so. Here are some of the variables you need to watch out for if you are considering refinancing your loan, this will help you determine when to refinance.
Factors to Consider
There are several factors that can affect your refinancing options that you should consider before making your final decision.Your mortgage loan officer can help you decide if refinancing is your best option based on these factors. Some of these factors that could influence your decision are:
- Credit Score- Your credit score represents the likelihood that you will repay your debts on time. This can have far reaching effects on your ability to take out loans or to refinance current debt. The higher the credit score, the better off you will be when you consider refinancing.
- Rates and Term Length- Often times, homeowners who are looking to refinance their home focus solely on the interest rates and not on the length of the term agreement. getting the lowest possible rate is crucial to avoiding debt but you can end up owing more money on a low rate, long term loan than you can on a higher rate, short term loan. Balance these two factors and consult your mortgage loan officer before making your decision.
- Refinancing Costs- Refinancing your home loan is not free, it comes with a fee. If the cost to refinance your home loan is too high, you may want to consider waiting until these costs drop.
- Home Equity- The value of your home can drastically affect whether or not you are eligible to refinance your home loan. If the value of your property has declined since you got your home loan, it may be difficult or even impossible to refinance. The most accurate way to determine your home’s value is to get it professionally appraised by an appraisal company familiar with your area.
- Your Situation- Not every situation is the same, and other factors that apply personally to you can impact your decision about when to refinance. When you plan on selling your house, and financial situations play an important role. If you plan on selling your home in a few years and it costs a couple thousand dollars to refinance, you might not break even on the refinance and you may want to reconsider doing so.
If you are interested in refinancing your home loan or if you are interested in any of our other services, you can contact us here or by calling us at 801.639.9000. For additional information, please check out my mortgage calculator or call me today.