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When to Look Into Mortgage Refinancing |
Some people are so excited to own their first home (and rightly so), that they jump on the chance to get a mortgage -- no matter what the interest rate. Others just accept their rate because they don't know what they can do to get that rate lowered. The good news is that, if you are locked into a high interest rate, you can always look into mortgage refinancing in order to save you money for the long haul.There are many reasons why someone may get a lower interest rate now, when they look into mortgage refinancing, then they would have when they first got their mortgage. The reasons mortgage refinancing may work for you include a declining market interest rate, better credit, and the fact that they have proved that they can make a mortgage payment on time every month. Mortgage Refinancing Due to a Declining Market Interest Rate Since mortgage interest rates fluctuate, you can get at better deal at any point in time just by watching how things are going and moving quickly when you see an opportunity. Looking for mortgage refinancing at this time should get you a lower rate no matter whether your credit situation has changed significantly or is still the same. The only way this method would likely not work in your favor is if you have multiple late payments recorded on your current mortgage or if your credit situation has worsened. Mortgage Refinancing Due to Better Credit Overtime, if you pay your bills on time, your credit situation should get better. Even if you already had 'good' credit, it still gets a little better as time passes. You may have went from 720, which is a nice score and would be accepted by most lenders with a decent rate, to a 780, which is a great score and is liable to get you great rate quotes when you go to refinance. Mortgage Refinancing Due to Payment History Even if nothing else has changed on your credit report, you may be able to get a better interest rate if you have maintained your current mortgage for a few years with a good payment history. The first mortgage you received may have been your first and, at that point, a lender might consider you a bigger risk because they don't know how you will adjust to a mortgage payment -- especially a large one. When you look into refinancing, lenders will see that you do have history maintaining mortgage payments and you might begin to look like a better risk. This will equate into a better interest rate. It is important to remember that mortgage refinancing has the ability to save you thousands no matter how small the interest rate point difference may seem. Through mortgage refinancing you can save $164 per month on a 30-year $250,000 loan with a 6% interest rate, as opposed to the same loan with a 7% interest rate. Multiply that $164 by 30 years and you have a savings of almost $60,000. Even if just a 0.25% decrease on the same loan will still save you over $15,000 for your effort. This is why mortgage refinancing is a great idea, even if it is just by 'a few points'. |
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