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3 Steps to Deciding if a Refinance is Right for You

3 Steps to Deciding if a Refinance is Right for You

Deciding to refinance your home is no small decision. The best time to choose to refinance is when it will help you save money, build equity, and pay your mortgage off faster. If rates are low enough, people with newer mortgages can even benefit from a refinance.

1. Determine your goals
First figure out: 1) How long are you planning on living in this home? 2) Do you have financial goals? 3) What is your credit score?

Once you know this you can start making an informed decision about refinancing. If you have a credit score of 740 or higher, you will get better rates if you choose to refinance. If your credit score is below that, it might be a good idea to wait and focus on building credit first.

If you already have a credit score of 740 or higher, you want to refinance your mortgage when the current rates are at least 1% lower. This will help you reduce your monthly mortgage payment and save on the interest you are paying on your home in the long run.

If you are planning on moving in a year or two, it may also be a good idea to wait. Moving within a year or two of refinancing will prevent you from reaping all the benefits. It also takes a couple of years for you to break even and start saving money. However, if you know you are going to stay in your home for another 5 years, refinancing your mortgage could be the right choice for you.

2. Find out if you will qualify
Just because refinancing makes sense right now, you still need to see if you can qualify. Even if you are paying your mortgage on time every month, that might not be enough to qualify.

Your ability to qualify comes down to your income, your credit, and the amount of equity in your home. The bank will use these factors to determine if your home is worth more than the value of the loan, that you make enough to pay off the loan each month, and that you are creditworthy.

3. Get help
An expert mortgage lender will help you decide if refinancing is right for you. They will also help you determine if the money you save from a refinance will make it worthwhile. Graystone Mortgage will help you simplify the steps for the loan process. Contact us today to find a loan officer. We are dedicated to making your homeownership easy.