Very reasonable rates make refinancing appealing. Unfortunately, low house prices and credit scores prevent many homeowners taking advantage of these rates. Common question asked by many is that could they refinance their existing mortgage? Securing these rates would give peace of mind that they will be alright even the rates start moving up from here. How would homeowners be able to conclude if they could refinance home mortgage loan now?
Probably the most significant determining factor is the house valuations. You should start with finding out how much is your home worth. Several websites allow you to check the prices of houses sold recently. Property newspapers are another place to check house prices. Find out how much equity you have in your home before starting your refinance shopping. For conventional mortgages, loan to value needs to be reasonable to get good rates. Although there are other options available with low loan to value, it certainly limits the choices available.
While the mortgage rates are low, savings interest rates are just about worthlessly low. As a result, many homeowners decide to utilise their savings to lower loan to value, so that they could refinance with the best rates. Securing the best rates is important, because you want to complete refinance mortgage and forget about it for a few years to reap most savings out of switching lender. Preferably, you do not want to incur another refinance closing costs for a few years. Paying into a refinance deal is an alternative for people who have the means. Savings you will receive every month will allow you to build the back up funds fast again.
Now is the time to find out your existing home loan rate and compare them with the current rates offered. You will come across many articles and experts using a 2% improvement in rates to make it worthwhile to refinance. However, if you are intending to stay in your home for the next 15 years, much less rate gap will justify refinancing. Mortgage refinance rates are record low, so this time you might keep the new mortgage for quite a long while. Another good example is switching to fixed rate from adjustable rate mortgage. These low rates will not last forever. Think how much you could save if the rates were to shot up a few points. Furthermore, you will be able to sleep well with fixed rate home loan.
Hopefully, your credit score has improved since you got your mortgage. Improved credit score has the ability to give you better rates on its own. In conclusion, do the math very carefully; you will be able to see things more clearly when you put them on a paper.