Home refinancing is one of the most important decisions you could ever make in your entire life. That is because the decision you make will have an effect in your life in the long run, which could be, of course, either a negative or a positive one. With that said, it is a must that you are careful in making such decision by taking into account various consideration before you decide on home refinance, Austin, TX.
So, when NOT to consider home refinancing?
When your credit score isn’t that good. This will impact negatively on mortgage rates. In other words, the chances that you get better deals on home refinancing are quite low; you get higher interest rates, or worse, your application gets denied.
Solution: Improve your credit score by eliminating credit card balances and paying bills on time.
When you do not intend to stay in the house. If you are planning to put your home up for sale in the next five years, then it isn’t that a good idea to home refinance, Austin, TX. Doing so will most likely put your time and money into waste. When you sell your home too soon after refinancing means that you will not live in that home long enough to get the savings benefits of lower interest rates. And, remember, you are going to owe some charges associated with the new loan.
When you are switching to an ARM (Adjustable-rate mortgage). Just because ARM rates guarantee a low rate for a certain amount of time does not mean it will work perfectly in your favor. The truth of the matter is, interest rates eventually will rise and you will end up paying more with that. That is just how things work with ARM.
When the numbers (savings) just do not make sense. The main goal why a lot of individuals consider the option of home refinance, Austin, TX, is the opportunity to save some good amounts with a lower interest rate. However, before jumping on the refinance wagon, do the math. In other words, calculate how much the refinance will cost you versus the amount you can save. Come to realize that a refinance can add years to your loan. Do you think you are benefiting from lower monthly payments if your loan has been extended an additional five years? Figure out the number and do what the number tells you.
Having a hard time deciding whether to home refinance or not? Talk to our mortgage experts at HomePlus today.
