Is there a best time to refinance your mortgage? It can be hard to know what is financially right for you. However, it is always better to be prepared for such an important decision that can significantly impact your financial future. Here is what you need to know:
Interest Rates are Historically Low
Interest rates shift periodically. Interest rates ranged as high as 18.6% forty years ago and are now as low as 3.19% as of August 2020. Depending on when you purchased your home, there is a good chance that current interest rates are even lower than your existing mortgage.
Consider taking advantage of these historically low rates to refinance your mortgage before rates rise again, and eliminate potential financial stability.
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You Want to Reduce Your Loan Term
Can you afford to pay off your mortgage earlier than you initially anticipated? Refinancing from a 30-year mortgage to a 15-year mortgage could save you thousands of dollars. On the other side, if you need more budgetary room, you can extend your mortgage. This will end up costing more money, but it gives you security so that you can keep your home if money gets tight.
Switching from an Adjustable Rate Mortgage to a Fixed Rate Mortgage
If you have an adjustable rate mortgage, it may be in your best interest to transition to a fixed rate. With historically low interest rates, you could end any concern about fluctuating interest rates by switching to a fixed rate. It is possible that you could pay slightly more initially, but you will be happy knowing that your interest rate will not suddenly rise.
Knowing more about your mortgage options could be the difference between financial stability and losing your home. Be prepared and stay informed.