As a homeowner, refinancing your mortgage can be a smart financial move. Refinancing can save you money on your monthly payments or give you a better interest rate.
However, it’s hard for most homeowners to determine if refinancing their mortgage is truly worth it and, if they did decide to refinance their home loan, when they would need to. You need to decide things such as if it makes sense for you financially at this moment and if the money you save will be worth it when you add in the cost of refinancing the loan. In this article, you’ll find a few times that you should think about checking your credit score before going to your lender to refinance your home loan at a possibly lower rate.
When your home needs major repairs and renovations.
While many homeowners just put major repairs and renovations on their credit cards, some can’t do that, and if the repairs can’t be put off, refinancing your home loan might be the best option. For example, if your roof is damaged or your shingles fall off, due to living in an area where hail storms are frequent, you’ll likely need repairs right away.
You might want to consider refinancing to afford the roofing company’s prices and to be able to invest in hail resistant shingles. If you need to put a new roof on your home, it’s a good idea to go to your lender to refinance your home loan to be able to afford those hail-resistant shingles and protect your investment.
Your home value has increased.
You may wonder how often should you refinance? That’s a tricky question. However, many homeowners choose to refinance when their home value has increased. If you have other high-interest debt to pay off, it’s worth going to the lender and looking to refinance to lower your monthly payment. The trick is to ensure that you don’t end up paying more in interest rates than you were at your original monthly payment.
Mortgage rates have dropped.
When mortgage rates drop, it’s the perfect time to consider your home loan refinance. Your lender will help you determine if it’s indeed the right choice for you, or if your mortgage rate was lower to begin with. If you’re considering this option, make an appointment with your lender, get a breakdown, and determine which is the best choice for you: sticking with your monthly payments, attempting to refinance your home loan, or going with a new loan entirely.
Your credit score has improved.
Your credit score does a lot in determining your interest rates and how much your monthly payments will be when you’re a homeowner. If your credit score has improved quite a bit since you took out your first home loan, then it could be time to look into your options. If your credit score is still no better or not much better than it was when you purchased your new home, then you might want to hold off and work on improving your credit score first.
Weigh the advantages and disadvantages of home loans.
Above are a few reasons why you would consider talking to your lender about the option to refinance your loan, but in the end, the choice has to be up to you. Do your research, weigh the advantages and disadvantages of home loans, and then decide when you have enough information to make an informed financial decision based on what you’ve learned.
These are a few ways to decide when you should talk to your lender about a loan. Remember, you’re the homeowner, so the final choice lies in your hands and the hands of your lender, of course.