When Should You Refinance?

One factor to consider is the cost involved. If your closing costs on a refinance are high, and the amount you’re saving per month is low, it may not be to your advantage to refinance.

When exploring the possibility of refinancing your mortgage, there are many things to consider.

One reason to consider refinancing would be to pay off-high interest loans such as auto loans, personal loans, or credit cards that may be hurting your monthly cash flow. Paying off these debts can help shift non-taxable debt into your home at a low interest rate while giving you additional interest write-offs.

A good time to refinance is when you currently have an adjustable rate mortgage and the short term fixed rate is set to adjust upward. Another reason to refinance is to shorten your term. If you have been paying on your mortgage and would like to save thousands of dollars off the remaining balance, shortening to a 20 or 15 year amortization may help.

One of the most common reasons for refinancing a home is to lower your monthly payments. You may lower your payments by lowering your interest rate, extending the term of your mortgage or a combination of both.

If credit card debt is piling up, and you have some equity in your home, it is sometimes a good idea to consolidate that debt and roll it into your mortgage, if the payments make sense in the end.

The most common reason for refinancing is to lower monthly payments/ expenditures. While rates have crept up, they remain at historically low levels. This means that you may still qualify for a very low interest rate on a home loan while being able to pay off credit cards or other higher interest rate loans and save money on a monthly basis.

The best time to refinance is when you feel it will benefit you financially or improve the quality of your life. If used wisely, the equity in your home can be your best tool for improving your quality of life.