When is a good time to refinance your home loan?
Timing of refinancing your home
Refinancing a home is a personal decision and should be based on your current financial situation and long-term goals. But if you are looking to save some money and have made at least six payments on your loan, then a refinance might be a wise decision.
Key Benefits to Refinancing Your Mortgage
- If the difference in your current interest rate and a potential new interest rate is 1 percentage point or more, it might be a good idea to refinance and get a lower rate.
- If you have a balloon rate or adjustable-rate mortgage, and can qualify for a fixed rate loan, you might consider refinancing the loan.
- If you have amassed a lot of high-interest debt on credit cards or other loans, securing a cash-out refinance could be a smart move to reduce your overall debt.
- If you have an unexpected expense or would like to tackle a home renovation, refinancing the mortgage to access cash from the equity could save money in the long run.
Risks of refinancing the mortgage
- When the closing costs – which are rolled into the new mortgage – cause your monthly payment to be too high, then refinancing might not be a good decision.
- If you plan to stay in your home for only a short time but the break-even point on the new mortgage is longer, then you might reconsider a refinance.
- You are over halfway through your current mortgage, refinancing would reset the clock back and might be a good decision.
We are here to answer your questions!
Q: At what point is it worth it to refinance?
The decision to refinance a mortgage should be based on your financial goals and situation. But, if you want to lower your monthly payment, are trying the reduce the interest rate, change the terms of your loan or take out cash from the equity accrued, then it might make sense to refinance your home. Use a refinance calculator and consult with your lender to see it it’s right for you.
Q: How long before you should refinance your home?
At a minimum, you must wait seven months before refinancing your home. During that time, all six mortgage payments must have been paid in time and in full.
Q: Is it a good time to refinance my home in 2023?
The decision to refinance your home in 2023 should consider several factors, including the current interest rate on your loan, the length of time you have been in your home, the terms of your loan, your financial situation and how long you plan to stay in your home. Use a refinance calculator and consult your lender to see if a refinance is right for you.
Q: Is it worth refinancing early?
In some situations, it makes sense to refinance early in the length of your loan if the difference between your current interest rate and the new interest rate is at least one percentage point. But remember, there are costs associated with refinancing a mortgage and you are resetting the clock on the loan payoff. Use a refinance calculator to make sure refinancing a mortgage is right for you.