Thursday, December 3, 2015

How Soon Can a Mortgage Be Refinanced? (part 2 of 2)

Consider the 2 percent rule.
Just because interest rates have fallen a tiny bit does not automatically justify your decision to refinance.  Consider refinancing only if the new interest rate is at least 2% lower compared to the rate you're currently paying.  A 1% difference in interest is not sufficient reason to make the switch.

Remember that there are costs associated with a new loan.  When you consider refinancing for your mortgage, remember that you will have to pay extra for closing fees.  An interest rate as low as 1% will not cover the expense.

You have no late payments.
You could go ahead and refinance a mortgage provided you have paid your loan faithfully for the last 12 months.  If you have never had a late payment during the last year, you could make the shift and have your mortgage refinanced.

You have already built up equity.
If you want to refinance a mortgage soon, try to examine if you have already built up equity.  You should have a minimum of about 5% or 10% equity (depending on the lender) before you could consider refinancing as a feasible option.

So is refinancing an option for you?
Of course, you can always consider refinancing your mortgage at any time you feel most comfortable.  The key is to consider the time factor, along with the type of opportunity being presented by the market.  After all, refinancing is really getting a new loan.  Just be prepared for the procedures and costs that you will have to go through all over again.

No comments:

Post a Comment