You may have heard in the news recently that the Federal Reserve raised interest rates again. You may have also heard now is the time to consider mortgage refinancing before the rate increase affects home loans. How can you know if the right time to refinance is now?
Let’s look at some key indicators you can use to help you decide:
- Your credit score has improved. If you had so-so or good credit when you first obtained your mortgage, you could be paying a much higher rate of interest. Refinancing could bring the rate down, as well as lower your monthly payments.
- The interest on your current mortgage is higher than current rates. Lowering your interest rate with a rate and term refinance will help you save money over the length of the mortgage.
- You want to make home improvements. If you want to add on a room, finish your basement, or renovate your kitchen, a cash-out refinance could be a good choice.
- You want to pay off high-interest You could save money in the long run by paying off high-interest debts with a cash-out refinance.
- You have an adjustable rate mortgage (ARM). With an ARM, whenever rates increase, the interest rate on your loan also goes up. If you want to lock in a fixed rate, you should consider a rate and term refinance.