There are many factors that go into deciding when to refinance. Many of those factors are individual in nature, so the right time to finance is really a matter that you must decide yourself. However, there are some general guidelines that you can use to figure out if it is the right time for you refinance or not.
Your Goal One of the first things to consider when you are deciding when to refinance is your main goal. Everyone has a reason for wanting to refinance. Many times it is to take advantage of low interest rates. However, many people simply see a drop in interest rates and figure they better refinance. The better thing to do is to do some calculations and see if that is really the best deal. In some cases the costs of refinancing can wipe out the benefit of the lower rate.
Another reason many people refinance is to consolidate debts. Again, though, you have to do some calculations to see if the interest would be lower and if consolidating really would save you money. You may also have another reason. Whatever the reason you need to take a long look at the benefits and make sure that you really will get a benefit from refinancing.
Multiple Refinancing for some people trying to figure out when to refinance, it may not be their first time. Refinancing too often can get expensive. Keep in mind that you d have to pay closing costs every time you refinance. Overtime that could add up to costing you more than if you have just left your mortgage in its original state. Make sure that you consider everything about refinancing before you start refinancing multiple times.
The Right Time As mentioned, only you can really know when to refinance. It is your choice, but you should think about the benefits and the financial impact. You should clearly know your goal and be ready to pay closing costs. You should also think about the future and about whether you expect the need to refinance again. It may be worth waiting if you foresee a reason to refinance in the near future.
Do not let a lender push you into refinancing. This is common when interest rates drop.Some lenders may start calling you and trying to tell you that you cannot wait to refinance. You should always check out any lender that is trying to be pushy. They may not be a legitimate lender. Never let them tell you when the right time is because a legitimate lender will never push you into it.
Do not always jump on refinancing. Sometimes it is just not the right time. You have the option, but it does not mean you have to take it. Make sure that when you refinance that it is the right time for you to refinancing. Generally speaking, as a home owner, you will know when to refinance because you will see the obvious benefits. Also, check out my other guide on and mortgage rate trends