Three Tips for the Lowest Refinancing Rates

Is now the best time for you to refinance your mortgage? If so, consider these suggestions before making your final decision.

If you are like many other American homeowners these days, you may be looking to take advantage of the low mortgage rates these days. If you already own your home, refinancing may be an option for you so you can save thousands of dollars over the term of your mortgage loan. But before you do that, here are three things you should consider before calling a mortgage refinancing agent.

Refinance the Entire Loan

Many people refinance their mortgage, but they only refinance a portion of their mortgage. If you are going to refinance your home, include the entire amount of the loan in the refinance. By doing the entire mortgage, you have a better chance of getting the lower rates on your loan. Refinancing only part of your mortgage makes you’re a bigger risk for lenders which will result in less favorable loan terms for you.

Don’t Use All Your Equity

When refinancing, you might think it is a good idea to include all of your home’s equity in the refinance. This may be good in some situations, but it is generally not recommended. Instead, you should choose a home equity financing loan or consider applying for a home equity line of credit soon after getting the refinance loan. This gives you the opportunity to refinance your mortgage with lower rates and use the equity for something else that you may need instant cash for.

Consider Buying Points

Many homeowners do not realize that they can buy points. This means that you can put up some money upfront in order to get a lower interest rate for the term of your loan. This is typically only beneficial if you plan on staying in your home seven years or more or else you won’t recoup the cost of buying the points. To see if buying points makes sense for your particular financial situation, consult with a mortgage broker or trusted financial advisor to crunch the numbers for you before you make that decision.

Before making your final decision to refinance, always do the math and determine what the best decision is for the long run. Refinancing might seem like a good idea for the immediate future, but it may not make financing sense for the long term of the loan.

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