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When is it the Right Moment to Refinance?

November 9th, 2019 / Pearly Dean

Refinancing is a big decision that you need to analyze thoroughly before making it. When someone decides to refinance their mortgage it means that they are eliminating their current loan with another financial institution and getting a new one with new terms and conditions. There are several reasons why a person can decide to refinance their home or definitely eliminate that decision from your mind. If you decide to refinance check with your closest net branch for refinancing options. 

Here are some valuable reasons to consider if you want to refinance your home:

  • Getting a lower interest rate is definitely a good reason to refinance your current mortgage. It is recommendable if your interest rate will lower at least 2%, although some advise that 1% is acceptable. it  is possible that interest rates can be lower nowadays than they were before. If this is the case refinancing is definitely the road to take.  
  • Shortening the term of your loan is a great idea. Lower rates will also reduce the term of your loan. You might be paying the same amount of money but for fewer years due to the interest rate being lower. 
  • Changing your mortgage into a fixed rate or an adjustable-rate. If you have a fixed-rate mortgage and interest rates are decreasing, then it is a good moment to refinance to an adjustable rate. You should make the change if you are planning on selling soon because if interest rates rise again you will not have to worry about them. On the other hand, if interest rates are increasing and you have an adjustable-rate then it is time to get refinance with a fixed-mortgage. 
  • Consolidating all your debt is a good idea, just be careful of handling all your finances in a careful way to avoid getting deeper in debt. 
  • You will be able to improve the equity of your home, just be careful of not spending the cash that you don’t have. 

There are also some reasons that will make you think 

  • Planning to sell your home is a reason not to refinance. Refinancing means going through the mortgage process all over again and paying a fee. If you are planning on selling your home soon, you will not enjoy the benefits of a lower interest rate. 
  • Refinancing to get smaller payments will give you space to financially breathe, just make sure that the money you are not using to pay your mortgage is not being wasted. 
  • Refinancing might require that you pay the refinancing fee in cash. It will be a bit complicated to come up with that money. Some lenders might allow you to include the fee in the loan but be sure to verify this with your lender. 
  • Extending your mortgage another thirty years means that you might be near your retirement age and might not be able to work as you are working right now. 

For more important articles regarding mortgages and refinancing, please visit https://branchright.com.  We have all the information you need to make good financial decisions.  

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