When interest rates decline, mortgage refinancing becomes a popular topic. You may want to save money on your monthly payment, change the terms of your current loan, or roll a second mortgage into the refinance of your first mortgage. Beyond declining interest rates, there are other good reasons to consider refinancing such as an improved credit score or an increase in the value of your home.
How Does Refinancing Work?
Refinancing is the process of getting a new mortgage in order to get better terms than the one you already have on your home. Technically, your first loan is paid off through the refinancing process and a new loan is created in its place.
When Should You Refinance?
Each situation is unique, and there are many factors that must be considered before making the decision to refinance. This flowchart will help you get started. It covers:
- Interest rate trends
- Current loan rates and terms
- Available alternatives
- Motivations for refinancing
- Cautions against refinancing
If you have questions or think you should consider refinancing, reach out to an advisor today!