The latest market figures suggest that homeowners could save big amounts if they go for refinancing today for mortgages originated in 2018. That is because 80% of mortgages from last year carry an interest rate that is 0.75% higher than the prevailing rate today, which is 3.49% – that is based on the figures provided by Freddie Mac.
There is one important reason why a lot of homeowners are still not able to take advantage of mortgage refinancing – the lack of awareness about how the mortgage industry works.
In this post, we are sharing some things to consider before deciding to refinance a mortgage, Tucson, AZ.
Take note of the following:
Current interest rate. If you can find a lower interest rate, a refinance is worth looking into. But, you will have to consider closing costs. In general, at least a half-point to a full point reduction in the interest rate will save you enough money/ You can cancel out the closing costs in just a few years when you get between 0.5-1% reduction on the interest rate.
Have paid down enough balance on your jumbo loan. If you applied for a “jumbo loan” for your initial mortgage and have paid down enough balance, it might be worth-considering to refinance a mortgage, Tucson, AZ. But how much is “enough”? If you have paid down the balance to less than USD 417,000, there is a huge chance that you get a “regular refinance,” which means to say that you have a good chance to qualify for a lower interest rate even if the rates, in general, have not gone down significantly.
Length of time you stay in the home. If you are not planning to live in your home for at least two years then it’s probably not worth it to consider refinancing- unless, of course, if you are refinancing from a very high-interest rate to a much lower one.
Improved credit score. If there is an improvement in your credit score from your original mortgage, it signals that it is an ideal time to go refinancing. So check your credit report from time to time. If you notice a significant change, you might be able to get a great deal on mortgage refinancing. You should take advantage of it.
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