Refinancing your mortgage is when you replace your existing mortgage
agreement with a different one. While the most common reason to refinance
your mortgage is to take advantage of significantly lower interest rates to
lower your monthly payment, it’s not the only reason for refinance.
Some people refinance to access the equity in their home to provide
flexibility to cover expenses, such as major home improvements, or to pay off
higher-interest debt. It’s easier to qualify for the refinance if you have at least
20 percent equity in your home.
If refinancing is something you are interested in, start with a mortgage expert
to see if it makes financial sense. Be sure you plan on owning the property
long enough to break even on the closing costs of the refinance - that is
the time it takes for the closing costs to be covered by the monthly savings.
If you have a credit score of 750 or more and a debt-to-income ratio of 36
percent or less, you will be more likely to get the lowest rates.
Making your money work for you is what refinancing is all about. It’s worth
exploring to see if it makes sense for you, whether you want to lower your
payments, pay off your mortgage sooner, or help fund a large expense
like a home improvement project or retirement.
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