Are you considering refinancing your mortgage? Refinancing can be a great way to save money each month, but in the end, it’s all about the numbers.
Regardless of whether your goal is a lower monthly payment or a shorter length for your mortgage, refinancing makes senses when it saves you money. Before you commit the time and effort, you should ask yourself these questions to make sure this is a smart fit for you.
Deciding to refinance your mortgage is a decision that should not be made lightly. Expect to spend the same amount of time and effort finalizing the details of this loan as you did on your original. Make sure that your schedule allows for ample time to attend to the needs of refinance. If you have little time, you are more likely to rush and make errors that could affect the outcome of your refinance negatively.
In order to avoid paying private mortgage insurance, homeowners are expected to have at least 20 percent equity in their home. If not, adding private mortgage insurance to the new loan might cancel out any benefits gained by refinancing.
Your credit score will play a big role in the refinancing process. Borrowers with good credit scores (720 or higher) receive the lowest rates. Alternatively, borrowers with a credit score under 620 will most likely not qualify for any loans.
The benefits of refinancing are not evident overnight-- you will have to calculate your breakeven point. For instance, if you break even in 24 months, but plan on moving in 12 months, then refinancing does not make financial sense for you.
If you have questions about refinancing or think you’re ready to get started, contact the experts at Midland Mortgage today.