When it comes to owning a home and a mortgage, it can be a major responsibility. Sometimes life happens and the mortgage becomes difficult to handle, or you might simply be thinking that you would like to try to lower your monthly payment. Perhaps you feel like a meeting with mortgage lenders could help you get a better interest rate. Whatever your reason, determining whether or not you should refinance your mortgage can be tough. Here are a few tips to help you along the way.
The first question to ask yourself is whether or not refinancing your mortgage is the best move for your financial status. Typically, unless the interest rate is better by at least one percent, you won’t see much of a drop in your monthly mortgage payment. To find the best mortgage rates in Delaware, you have to work with lenders who have experience and knowledge and can make sure they are giving you the best advice.
It might also be financially better for you to refinance with the idea in mind that you will have a shorter time to pay off the loan, thus paying higher payments to get to that point, rather than spreading them out over the typical 30-year mortgage. Only the best mortgage lenders will be able to help you make the right decision. The last thing you want to do is refinance and end up in a worse situation than you started out in, all because the interest rate did not decrease.
Your credit history and score will play a major role in your mortgage rate. Just like you needed a good credit score to even qualify for a mortgage, you will also need a good credit score in order to justify refinancing that mortgage. It is not likely that you will get a lower interest rate with a credit score that is lower than 720. So be sure to check your score and if it needs a little time to improve, do so before refinancing.
Will You be in Your Home Long-Term?
This is also an important question when determining whether or not to refinance. Typically, the refinancing of your mortgage can cost anywhere from 3-6% of the total amount of your loan. That means that it will not be worth your effort to refinance if you don’t plan to stay in your home for very long. For example, if the cost of refinancing was going to make your break-even timeframe around 12 months, you would need to plan to stay in your home for at least 4-5 years for the refinance to be beneficial for you. Also, something to consider, how close you are to paying your home off. If you are very close, refinancing is not the best move.
Contact the experienced professionals at Highlands Mortgage. We are a mortgage brokerage firm in Delaware, and will help you find the best mortgage rates around so you can buy the home of your dreams.