To refinance or not to refinance? Now or later? These are questions that may be on many homeowners’ minds as they think about their mortgage or mortgages. If you’re thinking now may be a good time to refinance, first ask yourself these 3 timing-related questions.
Mortgage rates go up and down all the time. Generally speaking and over time, mortgage interest rates tend to move up or down in similar trends to the movements of other rates. The Federal Reserve’s interest-rate policies play a big role in this.
Based on historical trends, interest rates — including mortgage rates — are low and have been since the Great Recession. That means if you got your mortgage before that time, you may be a good candidate for refinancing because interest rates are generally lower now than they were before the economic crisis.
Your current credit health is an important consideration when deciding whether to refinance. For one, getting a low rate may depend on your credit health — generally the better it is, the lower the rate you’d qualify for.
If your credit isn’t as healthy as you’d like, it may make sense to hold off on refinancing so you can work on better credit habits. Keeping up with your credit health, and how it may change, can be of great help when deciding on when to refinance.
Refinancing your home typically requires several up-front costs: getting an appraisal, closing costs, among others. If you’re planning on selling your home soon, the monthly savings you’d get from refinancing may not be worth the up-front costs. On the other hand, if you plan on staying in your home for a while, you’d stand a greater chance of the refinancing paying for itself – the accumulated savings you’d get by paying less every month would outweigh the money spent to refinance.
When it comes to refinancing, timing isn’t the only thing you should consider, but it can make a big difference. Now may end up being a great time for you to refinance, but think it through. You may not only save money, but also time.