To refinance your mortgage is a crucial financial decision that you might need to take. It can save thousands of dollars in the long run if done right. If you purchased your home before the financial crisis of 2008, you likely got your mortgage with a much higher interest rate than what is offered today. Many homeowners have chosen the refinance route to enjoy the benefits of the historically low-interest rates on offer.
Refinancing can be an arduous process. It is imperative to understand if this option is feasible or not for you and your mortgage. If you have been considering to refinance your mortgage and are unsure whether to go ahead or not, look for these seven signs that might suggest it is an excellent time.
Low Rates on Offer
Low rates on offer are one of the principal reasons for people refinancing their mortgages. Interest rates have reached record lows. They do show considerable fluctuation, hence don’t focus too much on daily changes. It is wise to look at the trends. While refinancing, it is essential to compare the rate on your current mortgage with the rates mortgage lenders are offering. If you’re not sure whether to refinance but believe that you’ve seen a considerable change in rates, you can talk to one of the loan officers at Texas Trust Home Loans, and they can guide you accordingly.
Your Credit Score is Strong
A good credit score is an essential factor in determining whether you get a reasonable mortgage rate or not. If you have recently paid off a credit card or any other debt, and have been making your mortgage payments on time, the chances are that you have a more than decent credit score. People who have a credit score above 680 can secure a low lending rate today.
You have an ARM
An adjustable-rate mortgage has an initial term with a low fixed rate for several years, after which the rate increases on an annual basis. If your ARM is about to be reset into a higher rate, you may want to consider switching to a fixed-rate while rates are at historic lows.
You have more disposable income
As we progress in our careers, we see a rise in our income. These come through promotions, additional education, or length of service. As that increased salary flows in, one of your initial plans can be to put that extra money towards your mortgage debt. This is a wise idea, as this can help you save money on the most significant debt you have, your mortgage. With a slightly larger payment, you can reduce your loan term and save thousands of dollars on interest payments.
You are nearing retirement
Some people often choose to refinance when they are near retirement. Their reasons vary depending on their financial situation. Some require a lower payment as their income starts to decline. Others would want to pay off quickly so that they are debt-free once they retire.
You want to renovate
Renovation is one common reason for people wishing to refinance and get cash out. Home equity loans allow home-owners to get a loan using the equity in their homes. This money can be used to renovate your house, adding improvements that will increase your home’s value in the long term.
You’re having trouble with your debts
Refinancing can be helpful when you are struggling to manage your debts. You can seek to refinance and consolidate your debts against your house. Although the process has its benefits, please bear in mind that it is not for everyone. It is highly advisable to speak to a financial consultant to figure out whether this option is beneficial for you or not.
If the option to refinance your mortgage suits you, we at Texas Trust Home Loans can assist you. From helping you find the loan which best fits your needs to providing a hassle-free mortgage process, you can rely on our expertise and technology to help you achieve your financial goals. You can visit our website www.texastrustloans.com