Mortgage refinance Austin, TX is one of the biggest decisions homeowners can make; thus, it is imperative that all of the important considerations are taken into account before accepting any deal from a mortgage company. But what are these considerations? What are the factors to consider to ensure that the decision you make is favorable to you?
The interest rates have gone down. According to the authority (the White House, specifically), the average homeowner could save USD 3,000 annually by refinancing their mortgage. With that savings, refinancing is indeed a thing to consider. However, homeowners should make sure that they get a steal of a deal i.e. a significant drop in mortgage rates.
You have a good credit score (or has improved significantly from your previous one). If your credit score has gone up, you can take advantage of that to qualify for a lower rate on mortgage. Current mortgage rates can vary by as much as 1.5% based on your credit score. For instance, 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. (Try it using myFico’s mortgage savings calculator)
Converting an ARM to a fixed rate mortgage. This is another yet a compelling reason to refinance a mortgage. This is particularly applicable when the interest rates on mortgage are expected to rise in the near future/in the coming years. In other words, refinancing your ARM is your tool to convert the adjustable rate on mortgage to a fixed rate mortgage to ensure that you are not affected by a looming increase in interest rates.
When 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 great option. For instance, 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, even if there are no changes in interest rates.