When Is The Best Time To Refinance?
Interest rates have been on the decline since the beginning of the year. Recent news related to the carona virus has also sparked market unrest and has led to another drop in interest rates to the lowest levels since November of 2012.
This recent drop has called many homeowners across the country to consider refinancing. But when is the best time to refinance?
There are 3 important questions you need to ask yourself before considering a refinance.
1. What Is Your Goal?
One of the first quetsions you may be asked is "What is the goal for your refinance?" Some of the most popular answers are:
- Lower my rate
- Lower my payment
- Lower my term
- Cash-out some equity to pay off some debt
- Do some renovations to my home
There are many other reasons to refinance, but knowing your goal is the first place to start.
2. What Is Your Credit Score?
Knowing what kind of shape your credit is in is important when it comes to refinancing. Your credit score can make a huge difference in the interest rate and terms that you are offered.
If you monitor your credit scores online, you're off to a good start. While the scores you see may not be exactly what we as a mortgage lender will pull, knowing what range your score is in will help us give you a better quote when we have our initial conversation. Once we review your full credit report, we can advise you if there are some things you can do in the short term to improve your scores, and thereby improving your rate!
I'll give you an example. I had this one couple I was working with and they didn't have bad scores, but one of the borrower's score was about 30 points lower than the other. I was able structure their loan in a way that saved them almost a full percentage point in their interest rate.
This isn't always the case of course, but knowing your score can have a huge impact on your pricing.
3. What Is the Value Of Your Home?
One of the last things you want to know before refinancing is the value of your home. While this may not be completely feasible, at least try to get a good idea of what it's worth.
When you purchased your home you likely used a real estate agent. It might be a good idea to reach back out to your agent and see if they can give you an idea of what your home's value currently is. You may decide that it's time to sell and purchase a new home if the market is favorable enough.
If you didn't use an agent, purchased a for sale by owner, or built your own home and you need a referral for an agent, we know tons of great local agents and realtors so reach out to us and we'll be happy to give you a recommendation.
Final Thoughts
This article begain with the question, "When is the best time to refinance?" For many it may be right now. For others, maybe not. The answers to these three questions above will have a lot to say about it
The truth is, once we have a conversation and receive your complete application, we can advise you if refinancing can achive the goals you have in mind. If it's not, then we'll be honest and tell you that as well. We want to help you make an educated and informed decision.
