Are you wondering if refinancing your mortgage is the right option for you? When you refinance a home loan, you replace your existing mortgage with a new one that repays the previous loan and often has a more attractive interest rate. Many homeowners use mortgage refinancing to improve their financial situation, whether its to take advantage of better interest rates, pay off their mortgage quicker, increase the value of their home, or even consolidate high-interest debt. Before you consider refinancing your home, ask yourself these important questions:
Why do you want to refinance?
Start by assessing your goals for refinancing your mortgage. For example, do you want to lower your monthly mortgage payment? Do you want to pay less interest? Are you trying to consolidate existing debt? Do you need to obtain a cash-out loan to make home improvements or cover other large expenses? Taking some time to identify your financial goals will help you determine whether or not refinancing is the right choice for you and your family.
How much equity do you have in your home?
Your home’s equity is a key metric lenders use in determining your eligibility to refinance. Your home equity is the difference between the appraised value of your home and your current mortgage balance. The more equity you have, the more financing options may be available to you. In general, it’s recommended that homeowners have at least 20 percent equity in their property to refinance, but if you have less equity and good credit, some lenders will still be able to refinance your mortgage. Talk to a mortgage expert to understand your options for refinancing.
How long do you plan on staying in your current home?
If you’re planning on moving soon, you may not have the time needed to recover the additional costs involved in refinancing the mortgage. However, if you expect to have your current home for at least several more years, refinancing may make financial sense for you. Usually, the longer you plan to stay in your current home the more beneficial it will be for you to refinance.
What is your credit score?
Your credit score is one of the most important factors affecting the mortgage rate you’re offered by lenders. Before refinancing, take time to check your credit report with each of the three credit bureaus to ensure all information is accurate. If your credit score has lowered since getting your current mortgage, it’s a good idea to work on improving it before refinancing. Learn more about credit score tips.
Are you getting the best rate from lenders?
Shopping around for the best refinance rate can be time-consuming, but working with an experienced loan officer at River City Mortgage makes refinancing your home easier! No matter your refinance goal, we have the resources and knowledge to help you find the right option for you and ensure the refinancing process is smooth and hassle-free from start to finish.
Explore your refinancing options today! Contact the mortgage refinancing experts at River City Mortgage to learn more.