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When Is The Right Time To Refinance Your Home?

Oct 06, 2021
Refinancing your home could be the answer to reaching your big goals. When you refinance your home, you could potentially be securing a lower monthly payment, shorter payment term, or even cashing out for other large financial goals. But when is the right time to refinance and how do you know if it’s the best decision for your specific situation? 

If you’ve been considering refinancing your home, we have 5 things you should know before starting the process. 

Define Why You're Refinancing Your Home

There are many different reasons you may want to refinance your home. From looking for a lower interest rate and monthly mortgage payment to securing a shorter loan payoff term, to cashing in on your home’s equity for other large financial goals. Whatever your reason for refinancing is, you want to make sure you know exactly why you want to start the process before you get started

Timing Is Everything

Remember the process you went through when buying your home? Well, the process of refinancing isn’t too much different. While you obviously do not have to go through the process of finding a new home (Whew!), you should expect to go through a similar documentation and paperwork process with your lender.


First things first, you’ll have to qualify for your new loan agreement. This means preparing things like income documents, bank statements, credit history, taxes, etc. Your lender will walk through the entire process with you to ensure you are qualified for the best possible loan program for your specific situation. 


During the process, you’ll also undergo a home appraisal to determine the current value of your home. You may not need to invest in any large renovation but making sure your home is at its best through minor repairs, cleaning, and a boost in curb appeal can make all the difference.


The Benefits of Refinancing

We have briefly mentioned some of the things refinancing your home could help you with but let’s dive a little deeper. Once you’ve decided on your reason for refinancing, you will be able to choose the best path forward to reach that goal and reap the benefits you’re seeking. 


Lowering your monthly payment by refinancing to a lower rate could mean an increase in your monthly savings on your home. If you’re aiming for a shorter repayment term, you will find yourself paying less interest over time on your mortgage loan. 


Another benefit of refinancing could be the ability to cash out on your home equity. As you pay off your mortgage, you build equity in your home. That equity can be used for other financial goals such as debt repayment, college tuition, other large financial purchases, or even reinvesting in your home with home renovations. This is an option you should discuss in detail with your lender to determine exactly how much equity you have in your home and what the best option for you and your specific situation may be.


Timing Is Everything

If your goal is to lock in a lower interest rate, you’ll want to make sure you’re acting on it when it makes the most sense. Today’s mortgage interest rates have remained steadily low, presenting an incredible opportunity to homeowners. However, these conditions aren’t set in stone. 


Connect with your lender to determine what makes the most sense for your specific situation. They will be able to evaluate your entire financial situation, provide insight into the market, and create a plan that works to bring you to your goals.


Understand All Your Options

When refinancing your home, you have a lot of decisions to make. It’s important to understand that you are not confined to your current situation. Refinancing opens the door to new loan programs and terms, several different financial benefits, and even the option to try a new lender. 


When you refinance your home, you’re essentially paying off your current mortgage and starting on a new page. This means you can shop around for the best lender for you, ensuring you find the best terms and conditions for your specific situation. 


Ultimately, refinancing can be a huge financially beneficial move for homeowners today. If anything, be sure to do your research and talk to a trusted professional so you understand all your options and can make the best possible decision for you and your family. 


If you’re ready to start the refinancing process or have more questions about what’s involved, head to our Refinance Product Page Here or contact one of our expert loan officers today!


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