One of the biggest purchases that you will make in your lifetime is a home. This means that you will likely have to finance the purchase of a home with a mortgage loan. One of the things that you have to understand about mortgage loans is that they come attached with interest rates that can sometimes increase over time.
Since the life of a mortgage loan is so long, the amount that you are paying in interest alone is substantial. Refinancing your mortgage loan can be a great way for you to get access to lower interest rates and to get access to cash that you might need to maintain your home.
Before you consider refinancing your mortgage loan, it is important for you to know when the ideal time is to do so. Also, we recommend speaking to your YFG lending specialist to help guide you through this process.
Here are some of the most important things to consider when you are deciding when to refinance a mortgage loan:
Has Your Credit Score Gone Up?
Your credit score does matter when you are trying to refinance your mortgage loan. This means that you often want to wait to refinance your home until your credit score has had enough time to improve. You will get access to the lowest interest rates if your credit score has gotten better since you first obtained your mortgage loan. Taking a look at your credit report will allow you to see just how much your credit score has improved and if you will actually be able to get access to a much lower interest rate when you refinance your mortgage loan.
Debts Have Been Paid
If you have paid off some other debts since you first got your mortgage, it might also be a good time to consider refinancing. You might have paid off a car loan or student debt since you first obtained your mortgage loan. This means that your debt to income ratio has improved over time. This will help you get a much lower interest rate on your mortgage when you refinance the loan. As long as you have paid off some debt, it won't hurt to look into refinancing and see if it is the right option for you.
Fixed Rate
You might also decide that you want access to a fixed rate mortgage loan instead of variable. If you are looking for more stability, you can choose to refinance for a fixed rate that stays the same.
