Should I Refinance My Mortgage?
June 24, 2019 |
Owning a home is great. You’re building equity, improving your credit score with regular payments, never having to deal with another crazy landlord.
But sometimes those mortgage payments just seem a little high, right? Agreed.
So what about refinancing your mortgage? How do you know when refinancing is a good idea?
By checking out our tips below, that’s how.
1. Your mortgage interest rate is higher than the average.
Mortgage rates change all the time, and when they’re low, they can get pretty low. While the rates do depend on your credit score, there’s a possibility that you could refinance your mortgage for a lower interest rate and save some serious cash.
2. You need to lower your monthly payment.
If you’re looking at lowering your monthly mortgage payment, a refinance might be a good option. For example, if you take out a loan for $200,000, and you’ve paid down about $50,000, you can refinance that remaining $150,000 for a new 30 year term and significantly lower your monthly mortgage payment. Which is always nice.
3. If you have PMI and wish you didn’t.
Mortgage insurance (PMI) can be helpful as it generally allows you to purchase a home without putting down the standard 20%. But once your loan-to-value reaches 78%, you don’t need it anymore. So if you have an FHA and have PMI, you need to refinance your mortgage into a traditional loan to get rid of it….and save money.
4. Your credit score has improved.
What was your credit score when you bought your home? Has it gotten better? If you’ve had an increase in your credit score, it may qualify you for a lower interest rate on your mortgage.
5. You have an adjustable rate mortgage.
Adjustable rate mortgages tend to have a low fixed rate for the first few years of the loan. After that, the rate increases on a regular basis. By refinancing to a fixed rate mortgage, you could save some good money over time versus the previous loan.
These aren’t the only reasons, but they’re a good jumping off point. If you think you’re ready to refinance your mortgage, talk to the experts at Dime to get started.