Sometimes, your current mortgage just isn’t working for you anymore. And in cases like this, it might be a good option to refinance your mortgage. However, before you push through with refinancing, you have to examine some factors that can help you decide whether it is the right move or not.
How Long You Will Be Staying in the Home
Refinancing your mortgage is a risky business, as there are always unforeseen circumstances that can occur. And one of the factors that can affect you moving forward is how long you will be staying in the home. The longer you are staying in the home, the longer your loan is in place.
Furthermore, the longer you are in the home, the more equity you gain and the more money you can save if you refinance. So, the longer you’ll be staying in your home, the more money you will make by refinancing. However, if you sell the home, you will have to pay off the mortgage balance, which you will have at the time of the sale.
Home values are especially important if you are going to refinance your home’s mortgage. With the help of a trusted real estate agent, be sure to check the home’s current value, along with the value of any recent comparable home sales. If the value has increased over the past year, and you don’t plan to move soon, you can use this information to your benefit by refinancing.
However, if your home value has decreased or you plan on moving soon, it may not be a good time to refinance.
Your Credit Score
Your credit score is another factor that can affect your decision to refinance or not. You have to make sure that your credit score is above the average, which is 740. If your credit score is below the average, you will encounter difficulty in getting a new loan, and this will increase your refinancing risks.
In addition, if you have missed payments or have a bankruptcy on your record, it is more likely that you will face a challenge in getting a new loan. However, if your credit is above the average, it is possible for you to get a loan with a lower interest rate.
Your Debt-to-Income Ratio
Your debt-to-income ratio is also an important factor to consider. If your debt-to-income ratio is too high for your mortgage loan payments, it is likely that you will face problems in refinancing.
Be sure to get a handle on your debt, and if needed, consider bankruptcy and debt consolidation help. Avoid taking any more debt until you are in a safer financial situation. Also, get rid of the debt that you can until you are in a stronger financial situation.
As you can see, there are many factors that can affect whether or not refinancing your mortgage is the best option for you. However, as long as you consider all of these factors, you will be able to make an informed decision.
Refinance your mortgage with the help of Desert Springs Mortgage. We are a mortgage company in Phoenix focusing on the purchase market through realtor partnerships and outstanding customer service. Whether you are located in Arizona, California, Colorado, Oregon, or Washington, we would love to help you refinance your mortgage to one which is ideal for your needs. Call us now at (623) 432-1309!