When mortgage rates fall as they have in 2019, many homeowners refinance their loans. While refinance activity is up dramatically over last year, that doesn’t mean it’s always a smart move. Knowing when to refinance your mortgage is the trick.
Generally, if refinancing will save you money, help you build equity and pay off your mortgage faster, it’s a good decision.
When it’s a good idea to refinance your mortgage
“If you can shave one-half to three-quarters of a percentage point off your mortgage rate by refinancing, you should look into it,” says Greg McBride, CFA, chief financial analyst for Bankrate. “Just be sure the cumulative savings on monthly payments is enough to offset the costs of refinancing. If you’re planning on moving in the next year or two, it might not.”
Mortgage interest rates are determined by market factors, including the yields on long-term Treasury bonds. And of course, the best rates and terms go to those with the best credit. So the question of when to refinance is not just about interest rates; it’s about your credit being good enough to qualify you for the right refinance loan. Before you apply for a loan, check your credit report for free at Bankrate.com.
Your financial goals, how long you plan to stay in your home, how much equity you have in the home and your overall financial condition are important considerations when it comes to refinancing. Ask yourself the right questions to help you get…