From time, to time, many homeowners, consider, whether, it is the best time, to refinance, and replace their existing mortgages! Since interest rates, fluctuate, and nobody, has, a so – called, Crystal Ball, it makes far more sense, to seriously consider, and estimate, when it might make, sense, to do so, and when to keep, what you presently have. A wise homeowner proceeds, wisely, in order to unprotected to, his best interests, and, with that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 4 important considerations, every homeowner should be aware of, and understand, in order to wisely proceed.
1. Depends on homeowner’s current credit, and house’s appraised value: While many individuals continue, or enhance, their personal credit rating, from the time, of their original mortgage, to the present, some, have experienced, some financial reversals, or other negative conditions/ scenarios, which might make them appear, less credit – worthy! In addition, whether one, originally, purchased his house, at a price, which was lower, than the present, appraised value, is, also, a meaningful factor. Those with better credit, might qualify for a more attractive, mortgage interest rate, than others. One must, also factor – in, closing costs, etc, to determine, whether this makes sense!
2. Terms/ length of existing mortgage: If one is locked – into, a longer – term, low – interest rate, it may make little sense, to refinance! However, for those, with some sort of adjustable – term/ rate, means, under certain circumstances, it may be a good time, to refinance! For example, let’s assume someone presently has, a 7/ 30 mortgage, meaning, a fixed rate for the first seven years, and then, adjusts, if he is presently in years, three, by, six, and today’s interest rates are historically low, and one isn’t comfortable, with the prospects, in the future, when his rate, will change, he should consider his options.
3. Present interest rates: Are today’s rates, historically, low, or high? Do the financial/ economic experts, believe, they will keep so, in the longer – term, and why? How might changing rates, work, either, for, or against you?
4. Costs of refinancing: Remember, when one refinances, he, often, faces, important refinancing costs, including, taxes (in some states), appraisal fees, filing fees, and other charges, often, lumped – together, into a category, referred to, as Closing Costs. How many years, at a more advantageous rate, would it take, to make up, and pay for these additional charges?
Wise homeowners, recognize and realize, times, and conditions change, and evolve, and act, consequently! Will you pay keen attention to the possibilities, and what might make the most sense, for you?