The Best Time to Consider Refinancing Your Home

So, you think that you might be ready to refinance your home, but are not really sure if it is right for you. Here are some things to consider when it comes to refinancing your home. Most experts agree that you should not consider refinancing your home unless the housing market interest rates are about 2% lower than the original lock in rate of your mortgage. Here are some things to consider when looking at refinancing your home.
Obviously, if you have a current mortgage rate that is significantly higher than the current market value, then you need to consider refinancing. But beware, some of the lower interest rate mortgages will be adjustable and in the long run will cost you more.
If you are currently on a mortgage that is an adjustable rate mortgage, you need to look at your options. If the mortgage interest rates on your adjustable mortgage will steadily increase over time, make sure to look at the current rate and weigh out your options. You definitely do not want to be hit with any changes in the future on your adjustable rate mortgage. One day your payments may be 300 to 500 dollars more a month and then you are stuck. If you are in an adjustable rate mortgage and the chance to switch to a fixed rate, this will reduce the chances of the mortgage rate going up dramatically. It will also help you in the long run when helping to determine your budget, especially if you have hit some hard times.
Another thing to consider when refinancing is if you have a change in your income for the better. If may be possible at some time that you can make larger payments or double payments. You also may want to increase your equity as quick as you can so that you will own your home much quicker. If this is the case, then you might want to consider a shorter term mortgage. This is a great reason to refinance. Just make sure to really consider all of the terms of the new loan and take into consideration all of the impacts on your financial lifestyle before refinancing.
If you purchased your home under a balloon mortgage then you might want to consider refinancing if your loan is getting ready to come to an end. A balloon mortgage does not fully repay the loan over the term of the agreement. This will leave a balance due at the final payment that is rather large. If you see that you mortgage is about to pay off and you do not have the large sum of money that it is requiring, then you may want to consider refinancing as an option. This does generally make your payments higher, but you will avoid that huge payment at the end of the mortgage term.
There are so many reasons to refinance your home. In making the right decision for you, it is important to make sure to look at all of your options. Go to your lender, shop around, and get all the information before signing yet another mortgage agreement.