Refinancing your mortgage means replacing your current loan with a new one. In general, homeowners decide to refinance when the new loan will give them lower mortgage rates, but there are many factors to keep in mind when considering a refinance.
Is now a good time to refinance?
"Refinancing leads to lower interest rates and decreases your monthly payments"
According to Zillow, there are many more reasons to refinance your home besides lower mortgage rates. Refinancing may also come in handy for someone who wants to switch from an adjustable-rate mortgage to a fixed-rate mortgage, which would allow them to have invariable monthly payments. Other reasons could be to consolidate two mortgages into one or to create a cash-out refinance, which Bankrate explained is when you get a loan for more money than what you owe. Then you receive the difference in cash.
In most cases, you should refinance your home when it will lead to lower interest rates and a decrease in your monthly payments, but there is one other scenario that may make refinancing a sensible choice. Realtor.com explained that if you have a 30-year fixed-rate mortgage, it may be a smart choice to refinance and get a 15- or 20-year fixed-rate mortgage, even if it requires paying extra every month. It is possible that doing so could still result in you paying less for the loan overall.
Do your homework: Research which lenders will give you the best rates. Zillow cautioned that many lenders charge fees for things like applications and insurance costs, so make sure you are searching for the best deal. Your credit score, income and other factors will again be examined as they were for your first mortgage, so make sure you have all of that information organized and you understand your qualification limits.
Having trouble qualifying for a standard refinance loan? Impac Mortgage Corp. Retail provides a variety of alternative refinance products. Impac Mortgage Corp. Retail specializes in alternative lending and helps nonqualified borrowers find a loan that is right for them.