Saturday, February 12, 2011

When is the right time to Refinance?

When is the right time to refinance your home loan?

Whether you purchased your home last month, or several years ago, it's always a good time to assess your mortgage situation. Your household could save hundreds or even thousands of dollars each year by being smart when it comes to your mortgage.

Regardless of the market and interest rates, there are a few circumstances under which you should consider refinancing;

1.Your credit has improved. The best rates are always given to those with the best credit. If you had a minor blemish on your report at one time, it may have dropped off or exceeded the time frame under which it is considered in mortgage loan applications. Whatever the reason, if you think your score has improved, you might be surprised at the rate that is now available to you.

2.Your income or debt situation has changed. Maybe you've gotten a raise, or perhaps you've paid off a car or credit card. Either way, a change like this can make you look substantially better in the eyes of the mortgage lender. For instance, if you had a car loan with just a few months left on it, your "Debt to Income" ratio is still calculated based on that monthly payment. Even a small change can take you from one rate category to a much lower one.

3.Your home's value has risen. With rampant declines in home values in recent years, there is a good chance that a sale or two in your neighborhood will drastically change the appraised value of your home. This could change your mortgage situation in two ways; it could change your loan to value and change your rate category and it could even drop a PMI (Private Mortgage Insurance) requirement- saving you hundreds of dollars per year. And who needs PMI? Not you- it's for the protection of the bank and yields no benefit to the borrower.

Of course, many homeowners have opted to refinance due to appealing interest rates overall. But be careful not to opt for a rate when the overall picture, including points and fees, is worse than your current mortgage.

Want more information about the Mint Hill, Matthews and Charlotte area real estate market? Check out


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