7 Tell-Tale Signs You’re Ready to Refinance
In an economy where news travels fast and financial opportunities abound, day traders and investors of all kinds stand to make big money in a big hurry. As a homeowner, you are an investor who can find opportunities in the market to make money.
One of the best ways to invest is to refinance your home. Following interest rates and knowing when you are one of the people ready to see the benefits of an updated mortgage is a terrific financial move. It can lower your payments, shorten the term of your loan, free up cash for needed expenses, or all of the above.
Let’s look at seven ways that you can tell it’s time to refinance.
1. Rates Are Lower
Mortgage rates show considerable fluctuation. Don’t get hung up on the day-to-day changes; instead, follow the trends. If you’re unsure, but you believe you’ve seen enough sustainable change to be worth a refinance, consult your banker. Remember that there will be closing costs and other fees to cover, so make sure you can justify those. You can use a refinance calculator to know when the rate hits the sweet spot for your situation.
2. Your Credit Is Strong
While you may have good enough credit to get refinanced, you may not yet be in a position to maximize your savings. The best rates go to the best borrowers, so if you have recently paid off debts, cleared up old delinquencies, or done other things to help improve your credit score, you will be in a position to investigate a refinance. This is just one more good reason to check your credit report regularly!
3. You Have Special Qualifications
Our life circumstances change periodically, and some of the positive things we achieve can help us with a refinancing. If you bought a home several years ago, then enlisted in the military, your veteran status may allow you to get a better mortgage rate. The idea is that those who serve our country deserve a few breaks, so take advantage of them! You signed on the dotted line and went on duty—a little financial boost is the least you should get.
4. You Can Pay More
As we move forward in our careers, we typically see raises for length of service, added education, and promotions. When that increased salary comes to you, one of your initial plans to use it is probably going to be debt reduction. That’s the right idea, and when you can save money on the biggest debt you have, your home, refinancing can do you a world of good.* With a slightly larger payment, you may be able to cut years off your term and save thousands of dollars on payments.*
5. You Need to Pay Less
By the same token, sometimes new expenses come along. A birth, a child going to college, or caring for aging parents can consume a lot of our income. If you feel the strain of your finances and want to locate a place to get some relief, your mortgage can be the place to go. In this case, you can try to get a lower rate over the same term, so that your payments will drop without extending the life of the loan.
6. You’ve Settled In
Refinancing is a similar process to the initial creation of a mortgage. There is an appraisal involved, a mountain of forms to sign, and closing costs to pay. It’s not a process you want to go through if you only plan to stay in the home for a few years. But once your career, family, and education have let you put down roots in that home, it is worth the expense and trouble to set up the refinance, and it will last you long enough to pay for itself.
7. You’re More Alert to Your Finances
Finally, let’s consider the fact that you may have made a decision to ramp up your financial attentiveness. You want to shop around for better deals, use coupons, and buy in bulk. You are managing your retirement money intensively. You just want to pay attention to all the details of your financial life and never miss a chance to save.* This makes you a great candidate to refinance.
Refinancing is not something we do frequently, but it can have a long-term impact. As a result, we should be very selective about when we make that move and ensure that we make the move at the right time.