Did you know that the average rate on a 30-year loan stood at 6.74 percent as of December 2022, according to Bankrate’s national survey of lenders?
Interest rates are at historic lows, which begs the question: Is it time to refinance your home? If so, there are a few things you need to consider first.
With the time, energy, and money you’ll save, it’s worth the time to evaluate your financial situation and the benefits of refinancing your home.
When is the right time, you may ask? Here are some factors to keep in mind.
When You Can Secure a Lower Interest Rate
When you can secure a lower interest rate, it is typically a good time to refinance a home. Interest rates are constantly changing in the market.
If you fall upon a period of decreased interest rates, it could be favorable to take advantage. Mortgage refinancing can help reduce your monthly payments and potentially reduce the number of years necessary to pay off the mortgage entirely.
To ensure you are getting the best deal, calculate and compare the total costs of refinancing, like closing costs and interest rates.
Additionally, it is wise to consider any fees associated with prepayment. This could cancel out any savings achieved.
If Your Credit Score Has Recently Improved
The higher your credit score, the better rate lenders are willing to offer.
It is important to compare different loan terms and lenders. This makes sure you’re getting the lowest rate available.
Refinancing with a more favorable rate can save you money, reduce your loan term, or lower your payments. Additionally, if you’re trying to build more equity in your home, refinancing with a shorter loan term may help you to achieve this.
The Housing Market Has Improved
Now that the housing market has improved, it may be a good time to look into refinancing your home. Refinancing can help lower mortgage payments in a month and develop a longer-term payoff.
Additionally, you may save on interest by locking in current interest rates. This could lead to lower overall costs in the long run.
Reverse Mortgages
A good time to refinance your home is when you plan to stay in it for a while.
Refinancing your home with reverse mortgages is a good option. This allows you to use the equity in your home to supplement your retirement income and support yourself in retirement.
Additionally, reverse mortgages have adjustable rates and flexible terms. You may be able to refinance when interest rates are lower than when you initially took out your mortgage.
However, be sure to consider how long you plan to stay in your home and the current interest rates before you make a decision. Ultimately, pursuing a reverse mortgage refinance could save you a considerable amount of money in the long term.
When to Refinance Your Home
Overall, it is important to take the time needed to research your options and determine when it may be a good time to refinance your home. There are many options available, so be sure to choose one that is best suited for your needs.
If you feel you are ready, contact your local lender today to see if refinancing is a good option for you.
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