When is Refinancing Right for You?

Posted by Carey Frankel on Friday, November 11th, 2011 at 2:33pm.

With interest rates near rock bottom, you may have given some thought to refinancing your current Jacksonville Beach condo mortgage.

The major reasons homeowners refinance their mortgage is to save money on their monthly home loan payments; to extend their home loan payments, thereby making their payments more affordable; and to switch from an adjustable-rate mortgage to a fixed-rate mortgage to save money in the long run and lock in a low rate.

If you are debating whether or not to refinance your mortgage, there are a few things to consider:

·         Your goal - Make it clear to your lender what you are looking to accomplish. Depending on your financial goals, the lender will likely suggest different terms and conditions on the home loan. In addition, your goal for refinancing your home loan may affect which type of loan you secure – a fixed-rate loan or a variable-rate loan.

·         Your credit score - Make sure your credit rating is still where it needs to be to qualify for a competitive home loan rate. Your credit rate may have changed since the time you applied for your home loan, so it always pays to order a copy of your credit report from all three credit reporting agencies before contacting a lender.

·         Your property value – Many areas of the country have seen significant drops in property values since the housing market crisis a few years ago. As a result, your home’s value may affect your ability to refinance the loan. Your lender will likely get an appraisal on the home before approving you for a refinance.

·         Your current mortgage – Before refinancing, you should explore your current home loan’s terms and conditions. In particular, it is best to make sure your mortgage does not have a prepayment penalty. However, it is important to note that, often times, the advantages of refinancing your home loan far outweigh any prepayment penalties your lender may impose.

 

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