Apply for a Mortgage Refinance
If you’ve been comparing refinance mortgage rates and they’ve dropped at least 1% below what you pay now, it could be a good time to consider refinancing. However, that’s one of several factors to consider.
Do I have enough equity?
Before you can take advantage of current refinance mortgage rates, determine if you’ve been paying on your current mortgage long enough. You’ll need 20% or more equity in your home before you can refinance.
How long do I expect to stay?
As with any mortgage, you’ll want to stay in your home long enough to recover closing costs and take full advantage of the savings. If you plan to stay in your home for three or more years, refinancing could be right for you.
Are property values increasing?
If homes in your area have been increasing in value, you could be well over the 20% equity threshold. Whether it’s ideal for you to take advantage of refinance mortgage rates could depend on your neighborhood and the real estate market.
Can I shorten my loan’s term?
When refinance mortgage rates fall, you may be able to go from a 30-year to a 15-year mortgage without much change in your monthly payments. It really depends on how much you’re lowering your rate. The bigger the drop, the bigger the savings.
Should I tap equity?
Refinancing helps you tap into your home’s equity to cover major expenses such as home remodeling projects, a child’s college education, or major medical bills. Speaking of home remodeling, some upgrades can quickly boost the value of your home.
What is my credit score?
Find out your credit score and resolve any issues that are affecting it. The higher you can get the score, the better your chances for loan approval and getting lower refinance mortgage rates.