Considering a Mortgage Refinance? Read This First

You may have heard the phrase: “Marry the home, date the rate.”

This means that if youbuy a housewhen mortgage rates are high, you canrefinance itwhen interest rates fall.

According to Redfin, around 86% of homeowners with mortgages haveinterest rates below 6%.

Instead of selling and buying a house at a higher rate, homeowners are staying put.

“The question is, at what rate will the floodgates open?

When yourefinance, a new home loan replaces your existing mortgage.

The main difference is that instead of shopping for a new house, you’ll keep your current home.

The difference is paid to you in cash.

The refinancing boom ended in 2022 when mortgage rates began to surge.

That opens the door to those with mortgage rates of 7% and higher.

Additionally, mortgage refinancing can run you thousands of dollars inclosing costs.

Other reasons to refinance

Refinancing isn’t just about interest rates.

Then look at a few different types of banks and credit unions.

Before you pay thousands of dollars to refinance a mortgage, do the math first.

Use a mortgage calculator or ask your lender to help you.

It can take several years to recoup the cost of refinancing through your monthly savings.

Deciding when to refinance can also depend on factors out of your control, like mortgage rate trends.

That’s why it’s so important to research rates ahead of applying.

As with any major decision, pursuing a mortgage refinance depends on your financial situation and goals.

Just double-check you also have a good credit score as well as a steady household income for qualify.

Most lenders will let you draw out no more than 80% of your property’s value.

In this example, that would be $200,000.

Since you’re refinancing, you’ll also get a new interest rate and loan term.

This likely means you’ll extend your mortgage repayment term unless you refinance to a shorter term.