Many homeowners think about refinancing, but they simply don’t know when to start the process. What is a good time for some to refinance and when should other homeowners wait? Low mortgage rates do not make refinancing the best idea for some, while for others, it could be one of the best financial decisions they ever made.
In order to figure out when it is a good time for you to refinance, you need to ask yourself a few questions about why you are refinancing. If you can’t answer why, there’s no point in even considering refinancing. Next, once you have figured out why you should refinance, you should decide if the timing is right.
Here are some situations that may mean it’s a good idea to refinance now:
- Interest rates have dropped. This is a great reason to refinance in order to save money every month on your mortgage.
- You can pay more monthly. If you can pay more every month on your mortgage, you can refinance in order to get a loan with a shorter term. This way, you can own your home in less time.
- A major expense needs to be paid. If the expense justifies refinancing, you can pay for a major expense such as college tuition for your child or a home remodel.
- Your credit score has improved. Your current mortgage rate was determined by many factors, including your credit score at the time. It can be a great idea to refinance if your current credit score has improved.
Before you make your final decision to refinance, be sure to weigh the pros and cons according to your particular situation. Remember, what’s good for one homeowner is not good for another!