When Should I Refinance My Home Loan?

When Should I Refinance My Home LoanDo you need assistance when it comes to your finances? Does the question of home refinancing keep popping into your head?

Let’s find out as we lay down the cards and tackle the elusive question of all homeowners like you.

You may have a different perspective the first time you acquire your home mortgage from the way you look at it this time.  Several considerations should be factored to come up with the best decision that will shape your future finances.

There are three major points to consider when refinancing:

  1. Determine the Updated Rates of the banks or lenders. Remember that a difference of even 1% can give you good savings. Now, the next question is to stretch the life span of the loan or not.  Let’s say you have 20 years left on your existing balance, with an interest rate of 6.75% at $1,300/month, refinancing now can save you at least 2% compared to the original fixed rate so you will get a $300 off from the monthly amount due.
  2. If you are considering renewing for another 30 years on a lower monthly payment, you will end up paying more interests in the long run. To translate it in simple math means it will cost you $150,000 total interest on a 30-year mortgage compared to $50,000 out of a 15-year refinance cost. This is outside of the fact that a good credit score can give you a lower interest rate and an increased equity.   So, one piece of advice is to cut short your credit terms into half to save on interests and pay off your debts faster.

An announcement made by The Federal Housing Administration regarding the reduction of mortgage insurance premium rate can be another factor to think about in your decision-making.  If yours is an FHA- backed home loan, then you must take advantage of this great offer now.

  1. Your house’s real property value or equity is another determinant when you refinance as a higher percentage can yield you a lower interest rate. To translate this would mean the amount that you have paid off out of the original amount plus the property’s current market value. You need not worry since house and lot is an asset that always appreciates in value.

In a nutshell, it is always best to study the current refinancing trend so you will not suffer any pitfalls afterwards.  Do your research and reach out to trusted loan officers to reap the benefits of Refinancing.