Is Now a Good Time to Refinance? Expert Insights
Expert insights into refinance rates: benefits, risks, and timing. Learn the best time to consider refinancing and get help deciding what's right for you.
Is Now A Good Time to Refinance? Expert Insights
If you've been researching whether or not to refinance your mortgage, you may have heard conflicting opinions from lenders, friends, and family. Ultimately, the decision of whether or not to refinance is up to you, but there are certain indicators that can help you decide.
Interest Rates
One primary factor you should consider when deciding if it's a good time to refinance is current interest rates. Low interest rates make refinancing more attractive since your monthly payments are likely to decrease. A difference of one-half to one percent in the interest rate can save you hundreds of dollars over the course of the loan.
The Equity You Have Built
The equity you have built in your home can also help determine the outcome of a refinance. If you have at least 20% equity in the home, you may be able to qualify for a modern loan product such as an adjustable-rate mortgage, refinancing with cash-out to fund major home improvements or a new loan product that is more tailored to reducing monthly payments.
Your Credit Score
Your credit score is also essential when refinancing. It's important to make sure it is in the best shape possible to get the most favorable rates. Most lenders require a minimum score of 620, however it's likely higher for the best rates. Paying off any outstanding debt is a must, and you may also want to address any errors on your credit report to ensure you're receiving the best deal possible.
Determining IF Now Is the Right Time
Financial experts suggest that if you can reduce your interest rate by one percent or more, you should strongly consider refinancing. In addition, if you have built equity, and your credit score is good, there's a good chance it is a good idea to refinance. As with any major financial decision, it's essential to be fully informed before making a commitment. Leverage the expertise and experience of a financial advisor to determine if now is the best time to take the plunge and refinance your mortgage.