The lending market is now flooding with numerous refinance deals that aim to help homeowners keep their homes. Thus, there is no doubt that it is the best time for refinancing your current home loan. As you assess your financial situation, you will see there are many ideal refinancing options that could be considered better than your existing mortgage. There are still several factors you should consider before deciding to apply for or take any refinancing product. As always, you should not act impulsively. Would getting into a refinance loan be advantageous to you especially considering your current financial situation? Would you significantly save on costs? Would it be helpful to you? The best time to refinance your existing mortgage is during the following situations.
When borrowing interest rates fall
If your current mortgage has a high interest rate, it is always the best time to refinance it when interest rates decline. Generally, it is ideal to apply for an appropriate mortgage refinancing if interest rates fall by at least 1% below the interest rate of your existing home loan. Analyse the interest rate trend across the market. If you think it could still further go lower, it would be wiser to wait until rates further drop. If there are logical indications that rates would not fall lower, you should immediately act to apply for a mortgage refinance before rates go up.
When you find it harder to repay current mortgage
During the recent financial crisis, your income flow might have been affected. If you think your revenue is now less than sufficient if you continue to repay your costly mortgage obligation, a loan refinance could be an ideal option. Before making any decision, calculate the projected amount of money you could save from refinancing your mortgage with a loan that has a lower interest rate and a smaller monthly due.
When you repay for more than one home loan
If you have managed to take out multiple mortgages, you may be feeling the pressure now. If you are having a hard time shouldering all those loans at the same time, a mortgage loan refinance could be the best option to take. Apply for an amount that would be enough to cover or repay all your current mortgages. This way, you could consolidate those loans, enjoy a lower interest rate, and save on costs for covering those loans’ rates.
When you need to save money and get better terms
As mentioned, a mortgage refinance loan could help you save a huge amount of money each month, especially if the new interest rate is lower. If your existing home loan has terms and conditions that do not sit well on you, it is the time you take an exit through repaying it in full using a mortgage refinance. You could always shop around to find lenders that offer and provide refinance loans with lower interest rates and much better terms and conditions.
Lastly, you should also consider the terms stipulated in the current mortgage especially those that involve any early repayment fees. Some lenders intend to keep borrowers tied with them through imposing higher charges for repaying the loan in full prior to maturity. If your current lender imposes less of such fees, immediately apply for a refinance loan. If your lender does not, you may have to try negotiating to reduce the fee. Would shouldering such fees still enable you to save a significant amount of money? If it would, then go and get a loan refinancing at once.
Andrew has been working in the finance industry for several years. He offers advice on debt consolidation and refinance solutions.