Refinancing your mortgage loan is a process that requires significant consideration. Making sure you select the right option at this stage of your home ownership could help you save money over the years ahead. In this latest post, we’ll explain what to consider when refinancing a mortgage loan.
- Is the timing right?
Make sure that you understand each of the elements involved in the timing of the refinancing process. What are the current marketplace conditions and how do these conditions impact you when going through with your refinancing? For example, if you’re refinancing at a fixed rate, you might consider the current interest rate. Is the average rate lower or higher than your existing interest rate. Could you achieve a lower rate based on your current credit rating than you could when you began the mortgage?
- What is your current equity?
Your current level of equity is a leading consideration when refinancing a mortgage loan. It’s important that your new mortgage doesn’t require you to go into negative equity, in which you owe more to the lender than the home is worth on the marketplace. Consider the current value of the home as well as the increase or decrease in value in the home since you acquired it. This can help you to determine the potential value of the refinancing process.
- Penalties in your mortgage contract
Another leading consideration when refinancing a mortgage loan is the penalties you might face if you have to refinance. Some lenders use penalties as a way to prevent homeowners from continually refinancing their mortgages. These penalties could go into the thousands of dollars and may prevent you from achieving full value for your investment, even if the refinancing process makes financial sense from all other perspectives.
- Talk to your lender
Make sure that you sit down with your lender and discuss the refinancing process. The lender can guide you on each of the available options and help you to determine whether the refinancing process holds significant value for you in the years ahead.
The Mortgages Diversified Team at Summit Mortgage Corp, has significant experience in the lending field. To learn more about the process of refinancing a mortgage loan, call us today.