When To Refinance Mortgage And How Fast
Making your mortgage refinanced brings out lots of benefits and advantages for you. For sure, the most important and immediate rewards is the lower than normal rate you’ll enjoy. When done at the proper time and opportunity, having your mortgage refinanced can save you hundreds if not thousands of dollars in the long run.
Nonetheless, because right timing contributes a crucial factor in refinancing, it’s essential that you start learning the factors that can have an effect on how productively you can take advantage of it. So should you consider refinancing your mortgage? How soon can it be accomplished? Here are important things you should consider.
You Should Take The Right Timing
Applying for a mortgage does not imply you’re a sissy. This kind of loan, either you are getting it out for the purpose of purchasing a vehicle or a residential house, is certainly one of the important financial decisions you will be making in your whole life.
If you’re taking out a home mortgage loan and are thinking of getting it refinanced later, you should be happy to see that you can almost certainly obtain it at any time you want. However, if you obtain a mortgage and the interest rates begin going in a manner that is considerably favorable to you, you should not apply for refinancing automatically.
Why? Because in the first place, the difference in the new interest rate and the current interest rate should be sufficient to really reward you with some benefits. In the second place, nearly all lenders will most definitely counsel you to refinance only after your loan has matured for a certain time, let’s say least of 12 months or so.
However, it is good to take this into consideration only when interest rates have remained more or less the same and have not changed over time. Now, if at any moment after you have taken out a mortgage loan the market trend begins tipping onto your advantage, it’s time to consider refinancing your loan. Bear in mind that interest rates are at many times unstable and if you wait for a very long time for them to dip further, you might miss out on a very nice chance to take advantage of a good deal.
You Should Consider The Two Percent Rule
If the interest rates have fallen a tiny bit, this should not be the sole reason to justify your decision to refinance. You should consider refinancing only when the new interest rate is no less than 2% lower as compared to the rate you are presently paying. A little 1% difference in interest should not be enough reason to make a switch.
Also, keep in mind that you will have to pay additional costs which are commonly associated with a new loan. Should you consider refinancing for your mortgage, don’t forget that you will need to pay extra fees for closing. You should now realize that an interest rate as low as one percent will not substantially cover the expense.
You Should Retain No Late Payments
You could proceed and refinance a mortgage provided you have consistently and faithfully paid your loan within the last 12 months. If you have never incurred a behind schedule payment for the period of the past year, you can get the shift and have your mortgage refinanced.
You Should Have By Now Built Up Equity
If you’re contemplating to refinance a mortgage sooner or later, you should first try to examine if you have already built up equity. Depending on the lender, you should hold a minimum of at least 5 percent or ten percent equity before you could consider refinancing as a possible alternative.
Is mortgage refinancing a good option for you?
Of course, you can at all times consider refinancing your mortgage at any time you see most comfortable. The only key is to consider the time factor, together with the kind of opportunity being offered by the market.
In the end, refinancing is almost equal to actually acquiring a new loan. Only be ready for the same procedures and costs that you will need to go through all over again.