Refinancing your home is a great way to lower your interest rate and get some of the equity out of your home if you need it for things like home improvements or to pay for a child’s college or another large expense. But refinancing at the wrong time can end up costing you thousands in the long run. Ask any real estate lawyer CT, and they will tell you that deciding when to refinance is a tricky thing. Getting some advice from a real estate professional like a real estate lawyer CT is a smart thing to do. Before you refinance, you should also take into account things like:
Mortgage rates fluctuate based on a lot of factors and the general state of the economy. If mortgage rates drop, it could be a good time to refinance your home. Refinancing when the mortgage rates are low can save you thousands of dollars in interest over the course of your mortgage. By refinancing, you can lock in a lower rate and shorten the amount of time that you need to pay interest. Most experts, like a real estate lawyer CT, will tell you that if you can save at least 2% in interest, it's a good time to refinance.
Another factor to consider when you are deciding if it’s a good time to refinance your home is why you want to refinance. If you have an Adjustable Rate Mortgage and the payments are going to start increasing because rates are increasing then refinancing to a Fixed Rate Mortgage is a smart thing to do according to a real estate lawyer CT. Refinancing will lock in your payments so that you will know what your mortgage payment will be every month and save you money by locking in the current interest rate so that you don’t end up with huge payments as rates increase.
But if you are refinancing because you want to tap the equity that you have in your home, you should be sure that you will get some financial gain out of that or that you will be able to pay off a large debt with that money. Many homeowners end up refinancing when they need to pay for a child's college education or if they are facing a medical emergency. In that case, refinancing to access the equity of the home is a smart way to avoid debt.
It does take some time to build up the equity in the home again and to recoup the expenses that go along with refinancing. Refinancing is essentially paying off your mortgage and getting a new mortgage so there will need to be the same assessments, inspections, and other processes done that you went through the first time. Those all cost money, sometimes a lot of money. But if you plan on living in the house for at least five years, you can make back that money in savings and equity. If you're not planning on staying in the house that long then refinancing may be a bad deal for you. The best thing to do is talk to a real estate lawyer CT about your plans to get professional advice on whether or not now is the time to refinance your home.