3 Things to Know Before You Refinance Your Mortgage

Refinancing your mortgage will require careful thought and consideration into many different aspects, including how long you plan to live in your home, the length of time it will take for you to manage closing costs, and the role that interest rates will play. Since you already own the property, refinancing will be easier for you than for a first-time buyer. If you’ve had your home for a significant amount of time, you will have likely accumulated a fair amount of equity, making refinancing more straightforward. If refinancing feels right to you, here are three things to know beforehand.  

1. Decide Your Length of Stay

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Refinancing is dependent on how long you stay in your home. You must calculate your projected monthly savings once the refinance has been completed. The interest rate associated with the time-lapse will affect how high or how low your monthly payment will be. You will want to consider where interest rates will likely fall to determine whether refinancing is the smartest option. You’re not likely to know how interest rates will naturally rise and fall without doing your research.

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To get a better understanding of how to refinance, refer to the mortgage refinance guide that provides all of the information you’ll need to know beforehand. This way, you can make a more educated financial decision.

2. Keep PMI Close 

If you decide to refinance, you will have to submit a larger cash deposit than you anticipated in most situations and even just the thought of paying more money than you bargained for can definitely result in anxiety. Since these instances are so common when home values are declining, you will have to come to terms with the fact that your equity may ultimately suffer. With lower equity and the need to pay a larger cash deposit, you may need to lean on private mortgage insurance to make ends meet. 

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