When is it the Right Time to Refinance?

One of the most important aspects of refinancing your mortgage is determining when exactly when you should do it! With advances in technology, home owners can refinance mortgages online anytime they please, but doing it at the right time will help you get the most out of refinancing. Here's a look at some situations where you should consider refinancing and some when you shouldn't:

• The main reason to refinance mortgages online is to comparison shop between multiple lenders. There are literally hundreds of different lenders online and many offer lower interest rates than the banks. If you find that you can get approved for a mortgage that is a full percentage point lower than your current rate, then you should probably strongly consider refinancing. Lowering your mortgage an entire percentage point or more can save you thousands of dollars over the course of your loan.
• Do you plan on moving out in the next couple years? Generally speaking, most homeowners shouldn't even bother to consider refinancing if they plan on moving or only have a few years left on their mortgage. They simply won't be able to get any of the main advantages of refinancing and could even end costing themselves more money.
• An important factor in determining whether or not to refinance is the amount of equity you've built up in your home. While you can typically refinance whenever you want, it doesn't make much financial sense to unless you've built up at least 10% equity. For most homeowners, the more equity they have, the more they'll get out of refinancing.
• Have you recently had difficulty making your mortgage payments? If you've been late on any payments in the last 12 months, you may want to consider holding off on refinancing. Lenders tend to give out the best interest rates to those with a good credit score and repayment history. In this case, your best bet is to just wait it out until you can get register full 12 months on-time payments.
• The housing market is going through some tough times right now and many homeowners have seen their property's value decrease. Depending on how much the value of your home has gone down, you may want to hold off on refinancing. If you can wait until the market turns around and property values go back up, you'll save much more money by refinancing.
• Are you in desperate need of some extra money? Whether you just want lower payments or need more income to pay off other debts, refinancing may be the perfect solution. By extending the length of your mortgage, you can easily make your monthly payments significantly lower. Many people use the money they save from refinancing in order to pay off high interest credit card debt or even their child's college tuition.