Question:

When is it a good time to refinance?

Answer:

Refinancing is simply replacing one loan with another. Any time there is huge potential for savings, it is a good time to refinance.

Best Time To Refinance

  • If rates are dropping, even a half percent drop in the rate is signifying potential savings through a refinance.

    Talk to a loan officer and use some already developed calculation tools to show you whether refinancing costs will be higher than the savings. If calculations show that the break even occurs within a couple of years, it may be a good time to refinance.

  • Your equity increased.

    If your home is located in a high appreciation area, you are a lucky homeowner. Building equity with no effort poses a temptation to refinance.

  • Improving credit score is another reason to attempt refinance.

    Credit score is difficult to repair - bankruptcy, foreclosure and late payments can stay from 7 to 10 years. However, with time and some efforts towards repaying debt, including professional credit repair help, the borrower's credit may rise to levels high enough to make it a good time to refinance. If borrower's income had increased, coupled with improved credit time, a refinance may help them get much better rates due to higher credit and better debt-to-income ratio.

Final piece of advice: Monitor your credit report and score regularly, to ensure there are no inaccuracies or unauthorized activity. Your credit report and score are the two major methods that creditors and lenders use to make a credit decision about you. Higher scores usually mean lower interest rates, which will save you money.

See All 3 National Credit Scores & 3 Reports Instantly, Online & Free!

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Common misspellings: mortage and morgage