Is Now A Good Time To Refinance?

Refinancing your home loan can help you save money and update your loan’s terms, but as with many things in life, timing is everything.

If you time a refinance right, you may be able to lock in a lower interest rate or access the equity in your home to cover unexpected expenses without having to rely on higher-interest credit cards. If you refinance at the wrong time, you risk paying more in interest or increasing your monthly mortgage payment for the life of the loan.

So is now a good time to refinance your mortgage? And if not, when is the best time to refinance your home? Before you can decide, you need to take a look at your unique financial situation.

Here’s what you should know before you apply to replace your existing home loan.

When Is It A Good Time To Refinance Your Home?

The best time to refinance your home depends on you. Factors like your individual circumstances, financial situation and current mortgage rates should inform your decision.

Ultimately, refinancing is worthwhile when it will save you money or let you access the equity in your home to cover your expenses. There are a few ways a refinance can help you accomplish that.

If Interest Rates Are Lower

If interest rates are lower now than when you originally took out your home loan, you could pay at the newer rate. In another case, you may have private mortgage insurance (PMI) on your current loan. But if you have over 20% equity in your home, refinancing is one way to cancel this PMI.

If You Need To Access Your Home Equity

If you have a large expense or emergency cost to cover, you can apply for a cash-out refinance. This essentially allows you to tap into your property’s equity to cover said costly expense. For instance, you may have a home improvement project to complete or education costs for your child.

Some homeowners use their refinancing as an opportunity to consolidate their debt as well.

If You Benefit Financially

Again, circumstances vary. The best time to refinance a home will depend on your situation. If you want to find a “good time” to refinance, look for a time with the most financial benefits. Refinancing can be the right move when it provides you with savings in the present and long run. Furthermore, it should accommodate your financial situation in the near future and allow you to comfortably cover closing costs or repayment.