when to refinance

Is Refinancing Right For You?

In today’s housing market, many homeowners may see advantages in refinancing their homes. Individuals impacted financially by the mortgage crisis in the early to mid-millennia have taken advantage of low rates and have refinanced, in some instances, multiple times. So, you may wonder, is refinancing right for you? Well, there are a number of things to consider and certain criteria that you must meet in order to begin the process.

Let’s start first by looking at the two types of refinancing options: rate-and-term and cash-out.

Rate and term refinancing occurs when you want to change the interest or term of your current mortgage without increasing your loan amount (excluding possible closing costs). This is best done when interest rates drop substantially lower than your current rate.

The next kind of refinance is a cash-out. If you have equity in your home (you owe less than the home is worth), you may be able to refinance and get some of the equity out in cash. Homeowners can use the cash for any reason, but a common use is for home improvements, which may increase the value of the home.

The next thing you must consider and evaluate is your financial standing. Depending on your reason for refinancing, you may not be able to take advantage of the lower rates without exemplary credit as well as sufficient equity in your home, meaning the value of your property must be at an amount that is higher than what is owed on the mortgage. Also, there may be out-of-pocket costs, such as appraisal fees and other closing costs. You should determine if your refinance will cover the additional costs in the long run.

At the end of the day, deciding to refinance your house is a decision that should be made carefully but could ultimately improve your finances or your home, depending on your needs. Referring to mortgage professionals and getting specific help can be a smart choice.

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Consult an advisor and check out our financial calculators before making your decision!