Your mortgage is your key to owning your own home at some point. As long as you are paying your mortgage every month, you are able to maintain ownership of your property. The problem is your finances might have changed at some point and you will not have the ability to pay your mortgage.
Even if your finances might not have changed, having the opportunity to pay less on your mortgage is a great way to make sure you are able to maintain your budget. This is why you might think about refinancing your mortgage.
The only question you will need to answer is whether you are actually ready for a mortgage refinance or not. There are a few things to think about when you are looking at refinancing your mortgage to see if it is right for you. You should pay attention to changes in your credit rating, the remaining length of your loan, and the interest rates available.
Take time to consider these points to find out if you are truly ready to refinance your home. If you are ready, it is time to start looking into finding a mortgage broker. You will be a part of a growing trend of people getting back on the refinance bandwagon, according to Forbes.
Changes in Your Credit Rating
You may not realize it, but getting a mortgage refinance is still a loan. You will need to go through the process you normally go through when you are applying to receive a loan. While you will not go through nearly as much as when you obtained the original loan, they will still look at things like your credit rating.
If you have had recent changes in your credit rating, like a credit card bill you did not pay, or failure to pay your mortgage payments, you may not be able to get the loan. Additionally, if you have had changes in your employment, you may have difficulty proving you have the ability to pay the new loan you want to obtain.
Remaining Term of Your Loan
When you receive a mortgage refinance you will have to pay closing costs on the loan. While this will not be as much as the amount you are going to pay when you get the original mortgage loan, it is still fairly high.
If you are close to paying off your mortgage loan, you may not want to go through the process of refinancing it. You will not save any money in the long run if the closing costs outweigh the money saved on your monthly mortgage payments. Consider the total cost of the new loan in deference to the loan you have now, in order to decide if the loan even makes sense for your financial needs.
Available Interest Rates
It is also highly important to look at the interest rates available on the market. Keep in mind that the federal government sets these interest rates and they will go up and down depending on how the economy is doing.
If the interest rates are low, you will be able to save a lot of money by refinancing your mortgage. If the interest rates available are higher than what you have now, you are better off sticking with the loan you have. Keep in mind the interest rates listed by the federal government are the prime rates.
You may not be able to get the rates listed, but you will be able to figure out the rate available to you when you speak with a lending professional. Consider your options and make the best decision regarding your financial needs, and you will be happy with your mortgage.
Check out this guide: Best Places To Refinance Your Mortgage.
What else should you consider if you need to refinance your home?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.