When is Refinancing Worth It?
Many homeowners struggle to pay their mortgages. We all want to be able to pay off our bills as easily as possible, which is why you may be considering refinancing your mortgage. When done correctly and at the right time, this can be a great choice that can help you manage your finances better. Refinancing should benefit you and your financial situation, not cause additional problems, which is why you need to be careful when considering financing your mortgage.
At Mazzoni Karam Petorak & Valvano, we know that refinancing a mortgage can be difficult, and want to see that you make the best choices for yourself. If you’re wondering when refinancing is worth it, here are a few times when it could be right.
When Mortgage Rates are Low
Of course, most people choose to refinance their mortgage when rates are down. If you’re thinking about refinancing, you want to get the best deal possible. It’s generally recommended that you refinance your mortgage for a rate that’s at least 1% lower than your current rate. Mortgage rates are expected to rise in 2022 after a long period of low rates during 2021, which is something to consider if you’re thinking of refinancing soon.
When Your Credit Score Has Improved
When you originally took out your mortgage, you might not have had the credit score you wanted, but since then, you’ve managed to raise it. The low credit score you initially had may have forced you to get a mortgage with a higher interest rate, and now it’s become difficult to pay off. If your finances are hurting because of the interest rate you had due to a bad credit score that you’ve since improved, you may consider refinancing for a better interest rate.
When You Need a Different Loan Term
Many people refinance for a different loan term, whether that means a longer or shorter term. If you can manage a larger monthly payment, you might want to refinance to have a short loan term that will be over sooner. However, you might not be able to afford your current monthly payment. In this case, refinancing for a longer loan term can help you get a lower monthly payment if you decide it’s worth paying the mortgage for a longer period of time.
When You Need a Cash-Out Refinance
Many of us could use some extra cash, especially when something unexpected comes up that we didn’t have funds prepared for. A cash-out refinance allows you to refinance your mortgage with a larger one, and you receive the difference in cash. If you’ve built up a lot of equity in your home and need cash, this refinancing option may be able to help.
When You Need to Switch from an Adjustable-Rate to a Fixed-Rate Mortgage
With an adjustable-rate mortgage (ARM), you typically get lower interest rates for a certain length of time. However, once that time is up, you could end up having to pay higher interest rates for your loan. Switching to a fixed-rate mortgage can help prevent your interest rates from rising when this period is over.
Discuss Your Situation with a Refinancing Mortgage Attorney
Knowing when the right time to refinance your mortgage is can be difficult, but you don’t want to make any mistakes that can make things worse for you in the future. You can avoid making the wrong choices regarding refinancing your mortgage by hiring a refinancing mortgage attorney. There are many complexities involved with refinancing, and at Mazzoni Karam Petorak & Valvano, we know how to handle them.
Contact us today for a free consultation where we can learn a little more about your situation.