When Is a Good Time to Refinance?

Current Market Interest Rates are Lower Than Your Current Mortgage

• Lower interest rates are the biggest reason to refinance as a lowered interest rate can significantly reduce your monthly payments. For example, on a $400,000 30 year loan, refinancing a loan with a 5% interest rate to a new loan with a 4% interest rate will save almost $3000 each year! Use our Mortgage Calculator to see how much you can save.

Improved Qualifications

• If your credit score or income has increased since you first got your mortgage, now may be a good time to refinance. Interest rates are more competitive for individuals with higher credit and it makes sense to take advantage of your improved financial situation. 

Eliminating Private Mortgage Insurance (PMI)

• PMI is normally required when there is an down payment of less than 20%. Sometimes the PMI is removed after acquiring a certain amount of home equity. For the loans that do not cancel PMI, refinancing can be a way to save money.

Converting an ARM to a Fixed Rate Mortgage

• ARMs typically have lower interest rates than fixed rate mortgages. However, during the adjustment period they have the potential to increase significantly above interest rates for fixed rate mortgages. Converting a ARM to a fixed rate mortgage ends any concern about further rate increases and provides long term stability. 
  

Cashing Out

• A cash-out refinance is when the new loan balance is higher than your existing balance. The difference is given to you and can be used for any purpose such as paying off debt or making home improvements. Oftentimes this cash is used to pay off high interest credit cards and is a way to eliminate that high interest debt for a lower interest mortgage.