The housing market continues to stabilize as the number of underwater mortgages was reported to…
It was recently announced that home refinancing applications have returned to where they were this past winter.
Rising home values have provided homeowners additional equity, leading many to cash out or reduce the term (also known as the length) of their mortgage to pay it off sooner. It’s another twist in what’s been an exciting year for the housing market.
Like all things related to refinancing, there are plenty of opportunities to develop a plan to make refinancing work for you.
Refinancing is a personal decision
It’s one thing to refinance to fund a child’s education or a new business venture, but spending your home equity on a shiny new toy is another thing. Refinancing your mortgage home should help move you closer to your life’s goals. Ask yourself if you’re spending your newfound equity in a way that makes sense for the long-term.
The number one concern to keep in mind is what you want to accomplish with your most important asset.
RATES ONLY TELL PART OF THE STORY
When refinancing your mortgage, you may be tempted only to consider interest rates, home values, and even national statistics.
Yet, these are only components of what you’ll need to consider.
Again, we can’t stress enough how personal of a decision this is. That’s why we recommend asking yourself and your family the following questions:
- Do I like the area I’m living in? Refinancing your home only makes sense if you’re staying a while.
- Is my goal to pay down my loan more quickly or save on my loan payments? Wrapping up your mortgage means keeping payments the same, whereas saving money means smaller monthly payments over the same amount of time.
- Am I in need of cash for a big life purchase? You may determine that your home’s equity is the best way to secure payment for a major life event.
- Do I have enough equity to justify a cash-out refinance? Ask yourself if it’s worth it or if you can wait a year or two.
Answering these questions with the people in your life can help you flush out ideas in a more careful way. It’s easy to see all those zeros attached to your equity and forget about the other factors that come with a home refinance.
Chasing rates without the certainty of a thoughtfully constructed choice may lead to regret in a few years, especially if you’re not passionate about your current home.
Crunch the numbers
You know your financial circumstances better than anyone else.
Speak with your local mortgage expert and do the math on your home loan. Find out what refinancing your mortgage will mean for month-to-month and your long-term future.
Also, don’t forget about this competitive market. Demand is high, inventory is low, and the competition is steep. After you sell, you become one of the many buyers engaging in bidding wars over slim pickings.
Refinancing in today’s marketplace is something that should be done thoughtfully.
Refinancing your home is a serious decision in any market, let alone this one. You should crunch the numbers to get the best result for your financial needs.
Our talented team of experts is here to guide you through what you need to know about making sense of your mortgage. In the meantime, our website offers easy-to-use resources to help you plan your next move.
Try our FREE mortgage calculator and get a head start on refinancing like a pro.