Is a Mortgage Refinance Right for Me?

05/31/16Nick

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A recent study shows that more than 3 million borrowers could save $200 a month or more, with nearly 1 million having the potential to save $400 a month or more.

SHOULD I REFINANCE MY MORTGAGE?

With mortgage interest rates at historic lows, now might be the best time to refinance your loan. Refinancing your mortgage can accomplish different goals:

  • Lowering monthly payment
  • Removing private mortgage insurance
  • Cashing out on home equity
  • Converting to a fixed interest rate

If bringing down your monthly payment is the goal with your refinance, lowering the interest rate or removing PMI (Private Mortgage Insurance) might be your best options.

In order to get the most out of your refinance, it's recommended to calculate your break even point. This is the amount of payments you need to make in order for the savings to overcome refinance fees or additional payments due to a revised loan term. Luckily, LendingTree provides online tools to help you plan your refinance.

Generally speaking, if you plan on living in your house for at least 6-7 years, a lower monthly payment through refinancing will save you money in the long-run.

Another reason for a mortgage refinance is to cash out on a portion of equity. If you’ve been in your current mortgage for quite some time, cashing out equity provides an excellent way to consolidate other debts, or even fund a large purchase like a new car, with a low monthly interest rate.

WHAT IF I HAVE BAD CREDIT?

If your credit score was sub-par when originally purchasing your house, chances are that it has improved with the payments you have been making. By increasing your credit score, you might have more bargaining power when negotiating interest rates.

There are also options for low-credit mortgage refinances. One program called HARP, the Home Affordable Refinance Program, is designed to help homeowners lower the cost of monthly payments, even in bad-credit situations.

HOW DO I GET STARTED?

Refinancing is much easier than you think. When it comes time to choose a lender, our Editors choose LendingTree for it's ability to connect you with multiple options, thus providing a better rate.

After choosing a lender, it’s as simple as filling out and submitting your information. It will usually take anywhere from 30 to 90 days to complete your refinance, meaning that you could be saving with a lower payment within a couple months.

FIND OUT HOW MUCH YOU CAN BE SAVING

If you are wondering whether or not to refinance, your best bet is to look at your options as soon as possible. You can request a personalized quote and lock in your interest rate when you visit LendingTree today. Don't wait too long, as mortgage rates are at historic lows!

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