Home refinancing refers to a process by which you replace your existing mortgage with a new loan. There are a number of reasons to refinance your home, including to improve your interest rate, reduce monthly payments, or even to get the cash you need to fund a home renovation project. Although home refinancing has multiple uses, it can be difficult to know whether it’s the best thing for your needs. At Centum Mortgage Store, Ltd., we frequently help homeowners like you figure out the answer to that question, and in this article, we’ll go over some of the things we take into account in order to do so.
- How long will you stay in your home? One of the first questions to ask when considering home refinancing is how long you plan to stay in or maintain ownership of your current home, as it doesn’t really make sense to refinance a property you plan to leave soon. If you plan to live in your home for at least several more years, then refinancing is likely a good option, but if you plan to sell it soon, then it’s probably not the best choice.
- What could you save by refinancing? Another thing to factor in when deciding for or against home refinancing is how much refinancing could save you. For example, if you are 20 years into a 30-year mortgage and refinance for another 30 years at a lower rate, you’ll likely end up spending more money in the long run due to the extended time period. On the other hand, if you are only 5 years into a 30-year mortgage and refinance to a 15-year period instead, your monthly payment will likely go up due to the shorter timeline but you may save thousands on the interest you would’ve otherwise paid. We can help you weigh these factors to make sure you’re making the best judgment call for your situation.
- Will you qualify? Even if home refinancing does make sense in your situation, the last word on the matter may not rest with you– you and your home will still have to qualify for refinancing based on the lender’s criteria. These criteria include things like your income, your credit, and your home equity. If you’re not sure whether you would qualify for home refinancing, give us a call to get our expert assessment.