Knowing the Right Time to Refinance
admin October 1st, 2008
The reason to refinance an existing mortgage is most of the times to take advantage of lower rate of interest. However, what is important is to know when the right time to refinance is. Here are some points to be considered:
- If you have taken a loan while you had bad credit score, then you can refinance for improvement of your credit ratings.
- Mortgage interest rate substantially reduce (approximately 2%), such that you can save a good amount paid as interest and the burden on your monthly budget comes down.
- Your income has increased and you desire to obtain a higher amount of loan.
- The benefit to cost ratio of refinancing is positive, i.e. the application and closing fees as well as prepayment penalty are lesser than the amount you save after refinancing.