Refinancing your home is an option many people tend to overlook. This might be because they think conventional refinancing won’t help their financial situation, or they simply give up because they’re overwhelmed by the financial mumbo-jumbo associated with refinancing in the first place.
Fortunately, refinancing your home is a great option for many homeowners. In fact, conventional refinancing is made even easier with the help of a financial expert. In 2016, a survey performed by the National Association of Realtors found that homeowners who refinanced were able to finance 90% of their home price.
Here’s how you can tell if you’re ready to refinance your home or discuss other mortgage loan options.
Interest rates have lowered
When homeowners typically purchase a home, the interest rate is determined by a number of factors. There is no greater influence on the interest rate of your mortgage, however than the national average for homebuyers, which is influenced by the economic climate of the country, location, and general housing market trends. Refinancing your home becomes common when the national average for interested rates have lowered below your current mortgage’s rates.
This is the perfect time to discuss your conventional refinancing or other mortgage loan options with a trusted advisor.
Your credit has significantly improved
Buying a home, especially when you’re younger, can result in higher interest rates. This is most often due to a lack of credit history or poor credit history, though poor credit can affect anyone at any age. If you have no credit or bad credit, your ability to gain a loan is damaged. And if you are able to obtain a loan, you might have to pay high interest rates as a result.
Once you’ve improved your credit score, conventional refinancing can work in your favor. You will likely receive lower interest rates on your variable loan rate and you might even be able to switch to a fixed loan rate.
You want to stop paying for PMI
Private mortgage insurance (PMI) is a type of insurance incurred when a homeowner purchases their home for little or no money down. It’s an added protection for the lending bank to ensure that they don’t lose money by selling you a house for a low initial cost. However, you’re often able to cancel your PMI once your home’s value goes up and you’ve paid enough of the total balance. This is when conventional refinancing can truly work in your favor.
Refinancing your home can be a great option for many homeowners who have managed to improve their financial situation. If you’re interested in conventional refinancing options, talk to the financial group you can trust — at Megastar Financial in Redding, CA, we will help talk you through the conventional mortgage refinancing process and discuss further mortgage loan options to improve your finances. Call today!