If you have a mortgage you’ve been paying diligently, it’s time to look closely at it. Consider just what it’s costing you monthly to pay for that mortgage. What if you could cut down the amount you’re paying? That would be great, right? You could lower your monthly payment and get more money for other things you want. That’s when you might be considering the best time to refinance mortgage.
So, what is the best time to refinance your mortgage? The short answer is that you should look at the interest rates. A general rule is that if the interest rates are currently a whole percentage point lower than when you took out your mortgage, you will benefit from refinancing.
An entire percentage point of difference is the norm because a refinance comes with fees and other expenses. So by the time you pay all of those things, a smaller decrease in your interest rate isn’t make much difference, and you could end up balancing out or barely benefiting.
Suppose you’re struggling to make monthly mortgage payments and have paid down some of your mortgage. In that case, you may consider refinancing to lower your monthly payments without lowering your interest rate.
Best Time to Refinance Mortgage for a Longer Period
If you refinance and stretch your mortgage out over a longer period, you will have a lower payment by default. Even if your interest rate is the same, this can still benefit you if you’re worried about being able to make all of the payments.
Remember that you don’t want to do this if the interest rate exceeds your pay. If you do, you could end up in worse shape because even though the principal payment may decrease, your interest payment would increase, which could balance or break even in the opposite direction.
If you’re considering the best time to refinance a mortgage, the best thing you should do is contact a professional. But first, contact your mortgage lender or look around for options about whom you may want to refinance with. From there, you can get your questions answered and learn more about how a to refinance might be the way to go for you.
Anyone thinking about the best time to refinance mortgage needs to look at their current situation and the current setup of their mortgage. You may be able to benefit, but only by working with a professional team can you know for sure. Contact LoanDepot to find out more about what your mortgage situation could look like.