By refinancing your mortgage, you could lower your monthly payments, decrease the total amount you pay for your home, or put your home equity to good use. But the answer to whether you should refinance isn’t always simple. Consider these factors as you make your decision:
Mortgage Interest Rates
If home loan rates are dropping, it can be a great time to take action. In this case, you could either keep your current repayment term while lowering your monthly payment or keep your monthly payment about the same while shortening the repayment term.
If home values are on the increase, you could take advantage of the increased equity in your home to either get rid of your private mortgage insurance (PMI) or take cash out to pay down high-interest debt, make a large purchase, etc.
The Length of Time You’ve Been in Your Home
Because you’re paying mostly interest in the first few years of your home loan, this is typically the most beneficial time to refinance.