Mortgage refinance, San Jose, CA is one of the biggest decisions a homeowner can make; thus, it is essential that all of the important considerations are taken into account before accepting any deal from a mortgage company. But what are the factors to consider to make sure that the decision you make works on your favor?
The interest rates. Are the interest rates in downward trend? Then it could be the best time to refinance a mortgage. The authority (the White House, specifically) has stated that the average homeowner could save USD 3,000 on a yearly basis by refinancing their mortgage. With that savings, refinancing is indeed a thing to consider. Be reminded, however, that you should make sure that you get a steal of a deal before finally accepting any offer.
Your credit score. If your credit score has gone up or has improved lately, you can take advantage of that to qualify for great deals on mortgage; that is true even if the mortgage rates have not gone down. If truth be told, current mortgage rates can vary by as much as 1.5% based on your credit score. To cite an example, on a USD 300,000 mortgage, a 1.5% higher mortgage rate due to a poor credit score could translate to additional USD 250 monthly mortgage payment; the opposite is also true. (Try using myFico’s mortgage savings calculator to get more idea on this)
Converting an ARM to a fixed rate mortgage. This is another yet a good reason to refinance a mortgage. This is specifically applicable when the interest rates on mortgage are expected to increase in the near future/in the coming years. With refinancing, you can convert your adjustable rate mortgage into a fixed rate mortgage in order to ensure that you are not affected by increasing interest rates.
You need to lower your monthly payment. If you want to lower your monthly mortgage payment for some reason, refinancing your mortgage can be a viable option. For example, after paying your 30-year fixed mortgage for 10 years, you can refinance your outstanding balance back to a 30-year fixed rate mortgage at a lower monthly payment. And that is possible even if there are no changes in the interest rate.