When Should You Refinance Your House Mortgage?
Is the time ripe to refinance a house mortgage? It could become your ticket to financial ease!
As the go-to mortgage lenders in Tucson, AZ, we at Altitude Home Loans know a thing or two about the subject. Keep reading as we dive into the nitty-gritty details.
Do It for the Right Reasons
Too many people reassess their mortgages without fully understanding their goals. Some of the best motivations to take the plunge include the following.
Lowering Interest Rates
Does the current market favor borrowers? If you locked in a mortgage at a higher interest rate several years ago, you might want to consider a rate-and-term refinance. You should ideally obtain a rate at least one-half of a percentage point lower than your existing plan.
Check your credit score and report before applying! You’re in a good spot when both have improved since your last mortgage. The best refinance rates go to people with the 740 score and above club.
Removing Private Mortgage Insurance (PMI)
PMI is extra insurance when your down payment dips under 20%. It protects lenders, not you, and adds to your monthly bill.
Refinance your house mortgage to eliminate this costly extra with enough home equity. The savings will roll back into your pocket instead of the lender’s.
Financing Big Purchases
Do you need to cover upcoming expenses? We’re talking about wiping out those credit card bills or avoiding student loans’ hefty interest!
Conduct a cash-out refinance and liquidate your home’s equity. People also use the funds to purchase property or renovate their homes.
Changing the Loan Structure or Term
You might want to speed up your mortgage payoff. Shortening a loan term can save you loads on interest over time. You can also switch from an adjustable rate to a fixed rate for more predictability in your budget.
Both strategies bring peace of mind and financial stability. Talk to your lender, assess the current rates, and see which option best fits your goals.
Know When To Reconsider This Route
Should you refinance? It’s not always the best move for everyone. You generally want to avoid:
- Discretionary purchases: Some fall into the trap of risking their home to finance luxury items like high-end vacations, extravagant cars, or other non-essential expenses.
- Changing loans halfway through the term: You probably won’t save on refinancing when you’re too far along in your mortgage. It means reaching a point where the bulk of the payment goes to the principal balance rather than interest.
- Selling too soon: If you need to put your property on the market in the next few months, you probably won’t have enough time to recover the refinancing costs.
Is Refinancing Worth It?
Take the time to analyze the situation by calculating the potential return, as well as accounting for closing costs and loan-to-value ratio. Altitude Home Loans always has you covered if you need assistance.
Dial 520-500-1010 to refinance your house mortgage — just have the required documents and we handle the rest! Give us a call today.