Have you taken a loan in the past? Are the high monthly payments or EMIs becoming a burden to manage your monthly expenses? If so, it is time for you as a homeowner to go for loan refinancing.
Home loan refinancing involves replacing your current mortgage with a new one having a new term of the loan. Individuals usually choose home refinancing to save money on interest payments in the long run. However, loan refinancing may not be the right choice for everyone, which is why it is essential whether it is now a good time to refinance my mortgage or not. There are many considerations while going for refinancing which shall be noted before making significant financial decisions.
Why should you opt for mortgage refinancing?
To save money on interest rates
While going for home loan refinancing, if you have maintained a decent credit score over time and consistent cash flow in your account, you are likely to qualify for low-interest rates. Switching to lower interest rates while refinancing your mortgage saves a huge load of money. Therefore, the borrowers need to compare the interest rates of current and new mortgages and make their move accordingly. In case there is not much difference in the interest rates, refinancing may not be a great option. Individuals also prefer to wait sometime and improve their credit score before applying for refinancing and getting a new mortgage at lower interest rates.
Pay off the loan quickly
Individuals also prefer refinancing into a shorter-term loan to get off the burden of paying the EMIs for decades. If you are confused regarding the new tenure, use a home refinance calculator from Preferred Rate to figure out the monthly EMIs you will have to pay and in how much time will it be completed.
When is the right time to refinance your mortgage?
As a borrower, if you wish to save money on paying interest rates for the complete tenure, they can consider refinancing as the best option. For example, if you have saved a significant amount of money, you can lower your mortgage term from 30 years to 15 years. This helps borrowers to pay off the loan amount with higher monthly EMIs and reduce interest rates.
On the other hand, if you are working smoothly with your monthly expenses and paying EMIs, you can keep your mortgage as is and are not required to refinance.
If you wonder how you will recoup your refinance expenses, simply divide the closing cost by the amount you save each month. This would give you a fair idea of where you stand regarding your finances, and you can make a move accordingly.
How much time does it take to refinance your mortgage?
The mortgage refinancing process typically takes 30 to 45 days to be completed. However, depending on the number of customers your lender is dealing with at the present moment, the processing time may increase. It is always advisable to lock your rate for a given period of around 40 to 60 days to avoid losing out on a good mortgage. Furthermore, do your research and get in touch with a reputable lender to save time and potentially get to the closing table faster.
Get your hands on the best home refinance calculator to make the right refinancing moves!
Anika Sharma