Refinancing your mortgage can be a beneficial financial move, but it may not align with everyone’s long-term goals. Let’s go over the top 5 factors you need to be taking into consideration when refinancing your mortgage.

1. Interest Rates

– Current Rates Vs Your Existing Rate: Compare the current market rates with the rate on your existing mortgage. If the new rate is significantly lower, refinancing could save you money.

– Rate Type: Decide between a fixed rate or an adjustable-rate mortgage ( ARM) based on your financial stability and how long you plan to stay in that home.

2. Refinancing Costs

– Closing Costs: Refinancing comes with closing costs, which typically range from 2%-5% of the loan amount. Ensure you can cover these costs upfront or check if they can be rolled into your loan.

– Break-Even Point: Calculate the break-even point, the time it takes for your savings from a lower interest rate to cover the refinancing costs. If you plan to stay in your home longer than this period, refinancing my be worthwhile.

3. Loan Term

-Term Length: Refinancing offers the option to change your loan term. While a shorter term can save you on the interest over the life of the loan, it also means higher monthly payments.

-Longer Term Implications: Extending your loan term can lower your monthly payment but increase the total paid over the life of the loan

4. Your Credit Score

– Impact on Rates: A higher credit score can secure a lower interest rate. Check your credit report and score before applying for refinancing to get a better understanding of what rates you may qualify for.

-Improving Your Score: If your score has improved since you took our your original mortgage, you might qualify for a better terms

5. Financial Goals

– Home Equity: Consider how much equity you have in your home. Lenders typically require at least 20% equity for favorable refinancing terms

– Future Plans: Think about your long-term financial plans. If you plan to move, the savings from refinancing might not outweigh the costs.

We would love to have a chat to see if refinancing your home is right for you!

Want to learn more? Contact us at 780.792.0009 or [email protected]