Home loan refinance, Austin, TX is an important matter that requires a clear-cut decision-making. Whatever decision you make will have a big impact on your financial situation – and the effect can be long lasting. Thus, it makes sense to weigh all of the factors (and a mortgage professional can be very helpful on this) before you make your final decision on whether or not to go for home loan refinancing.
When there’s a lower interest rate. Many homeowners go for refinancing when they find an opportunity to secure lower interest rates because that could mean huge savings. The changing trends on mortgage interest rates provides such opportunity. Industry experts recommend refinancing if one is able to secure 2% (or more if possible) rate reduction. If you are able to find at least 2%, then it could be a wise decision to go for refinancing. However, it is not worth it if you are just able to save a small amount with such interest rate reduction. For instance, it is more meaningful to go for refinancing at 2% lower when you have a 500k mortgage than when you have a 100k mortgage. In other words, figure out the number and do what the number tells you.
If you want to shorten loan terms. Another good reason to refinance your home mortgage is when you want to shorten the loan’s term. For example, if you are paying for a 30-year-fixed-rate mortgage, you can have it shortened to 15 years without a huge change in your current monthly payment.
If you want to tap home equity. You can access the equity of your home to cover some major expenses. For instance, it can pay for home remodel costs or for your student’s college education. However, be mindful that, though tapping home equity can be utilized for such expenses, it still can expose you to some financial risk. Again, you have to weigh all of the important factors if you plan to refinance your mortgage for the purpose of tapping your home equity line of credit. See to it that you are able to consult a mortgage professional who is experienced, familiar with your case, and knowledgeable about the prevailing state and federal laws relevant to mortgage.