Many people choose to refinance their home. This is a great way to improve your financial situation and to get in the best position to pay off your house. However, refinancing your house may not be for everyone. Here are some times when you should and shouldn't refinance your home.
1. You Should Refinance Your Home If You Had A Co-Signer
If you initially had someone cosign with you, then you should refinance as soon as you are able. Co-signing isn't a great option for the co-signer and can put them in a challenging financial position. For this reason, co-signing should only be a short-term solution. As soon as you are able to qualify for the loan on your own, you should do everything you can to get the co-signer taken off the mortgage.
2. You Shouldn't Refinance Your Home If You Are Close To Paying It Off
In some cases when you refinance your loan it will start the timeline over again. If you are in the final years of paying off your house, you shouldn't refinance if you can help it. Even though it might lower your payments, it would be better to just pay off the house rather than have lower payments for the next 15-30 years. If you have to choose between paying off the house and refinancing for lower payments, choose paying off the house.
3. You Should Refinance If Your Interest Rate Is High
If you bought your house while interest rates were high, then you should definitely refinance your home. In some cases, you can save thousands of dollars over time by lowering your interest rates. If interest rates are dropping and are significantly lower than what you are currently paying, talk to a mortgage lender about what they could do for you to lower your monthly payments.
4. You Shouldn't Refinance If You Have To Pay Closing Costs Again
Although your interest rate may be lower, you need to also look at the closing costs. If the mortgage lender is asking you to front thousands of dollars in closing costs, then you most likely aren't going to save money in the long-run. Instead, you may lower your monthly payments, but when you factor in how much you paid up front in closing costs, you might actually be in a worse, or at the very least, the same financial situation.
By considering these things, you can decide if refinancing is the right option for you. For more information, contact a company like Liberty Escrow Inc.Share
13 September 2016
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