To refinance a mortgage, Tucson, AZ, means involving some great deal of money. Therefore, doing a careful evaluation is necessary so that your loan application will not go down the drain. The goal is to ensure that you are on the right track in your refinance application to avoid financial pitfalls associated with your mortgage refinancing decision.
Now, the question is, what are the things to consider when you refinance a mortgage, Tucson, AZ? Here are some scenarios that justify your refinance application.
When you see a great deal on interest rates
If there is a significant decline in mortgage interest rates in the market, it could be the best time to refinance your mortgage. The rule of thumb is that if you see at least a 2% decrease, you should take advantage of that opportunity to secure a refinance deal because that could translate to thousands of savings.
When it allows shortening the loan’s term
Is there a significant drop in interest rates? Do you currently have a 30-year fixed mortgage? If yes, this could be a perfect time to refinance your mortgage. That means you can shorten the loan’s term without much change in the monthly payment.
Let’s figure out the number with the following example:
If you have a 30-year fixed-rate mortgage on a home valued at USD 100,000, refinancing from 9% (your current mortgage rate) to 5.5% (new rate) can cut the term in half to 15 years. That means you can pay off your loan earlier.
When converting to an ARM or Fixed-Rate mortgage
If interest rates continue to increase, refinancing a mortgage can be a viable tool to shield you from their ripple effect. That is when you refinance to convert an ARM to a fixed-rate mortgage. Converting to fixed-rate mortgages results in a lower interest rate and eliminates your worries over future interest rate increases.
The opposite is also true. Converting a fixed-rate loan to an ARM can be a sound financial strategy in cases of falling interest rates. It can even be more advantageous for those who do not plan to stay in their homes for longer years.
Online looking for a mortgage company that can guide you when you refinance a mortgage, Tucson, AZ? Talk to an expert at HomePlus today.