Answering Your 7 Refinance Questions on Mortgage
Many existing homeowners consider refinancing their mortgage due to so many reasons. However, if this is your first time refinancing, then it’s safe to say that you have so many unanswered questions to tackle. Below, you’ll find answers to common questions on refinancing your mortgage.
7 common refinance mortgage questions
- What time is best to refinance?
Honestly, there’s no secret formula to refinancing. Sometimes long-term fixed rates for mortgage rates take a slope down and allow those interested in hopping on. Moreover, you can consider some benefits like home equity and covering other debts you stand to gain with refinancing. Consequently, you can compare your current mortgage rate with that of the market and see if you’re at a profit or loss. After which, you can decide to refinance or not. Focus on your plan to pay off the loan and the accrued interest rates on these mortgages.
- How long do I wait to refinance?
Many people are curious about the number of times they can refinance their mortgage. Also, do they have to wait for years or some months before taking this next step? When it comes to mortgage refinancing, you are guided by the type of home loan you want. You can always wait or just refinance right away. The popular rule of thumb is to wait at least six months before refinancing your mortgage. This will enable you to cut off costs that come with regular refinancing.
- Are refinance rates worth it?
It is always smart to consider refinance rates, and most times, you’ll find that refinance rates have gone up when compared to home purchase loan rates. Another slight difference might be with your new refinance lender being cheaper than the former. A good measure is to consider the closing costs and weigh both options before you settle.
- Can I take out cash from my home?
This is not mandatory, and it all depends on your choice. Although you just might want to consider if you need cash or have other demanding expenses to cover. It is smart to check if a new loan term is suitable for you at any moment. Don’t forget that cash payments come with higher interest rates; this means you’ll be losing a little cash. Also, this method can make you end up with a larger loan amount which is a bigger burden to repay.
- Should I pay fees immediately?
When refinancing your mortgage, you have to decide if you’ll pay closing costs from your pocket or choose a lender credit to help. You can find a lender that offers a no cost refinance option and weigh both options before settling for any. Your major goal is to refinance your mortgage but still get rates that are cheaper than your current plan. Consider your current lifestyle and future needs, then decide which method works best for you.
- Which loan term is best for me?
So many mortgage terms exist, but you need to choose the one that’s right for you. You can opt for the common ones like a 30 year fixed mortgage or a 15 year fixed mortgage plan. Many homeowners who refinance go for either of these options. So you can always stay within your range and avoid resetting the loan term past its former duration. Also, 15 year fixed mortgage rates are cheaper than the 30-year plan, but this all depends on your current earnings and future plans. So consider a shorter-term loan if you plan to pay off your loan in this century.
- Can I skip a payment?
Is it no news that many lenders use this line as a marketing tool when they approach homeowners. This offer might seem too good to be true, but it works by closing your loan at a particular time in a month. You get some payment repayment relief because you won’t need to pay your old lender, and your new loan’s first payment will need a month to mature. However, this doesn’t mean you’ve skipped any payment. In reality, you only delayed the payment period. Notwithstanding, whenever you slow down loan payoffs, you delay your mortgage payments.
Refinancing your mortgage is something that every homeowner considers at one point in time. However, so many questions surround this term, and we’ve answered the popular ones. So before you go ahead with refinancing, check the answers to questions that you might have.