If you've made the exciting commitment of buying your own home, you know that it's both a great source of pride as well as a great source of responsibility. Home ownership comes with a wide variety of challenging tasks that you may not have had much appreciation for prior to your home ownership, and working to keep your mortgage rate low is on the top of that list.
Below, you'll find a guide to some factors you should consider during the refinancing process. Having this information in mind will allow you to avoid feeling overwhelmed or out of your league, and can help guarantee that you leave a refinancing appointment with the financial relief necessary to support long-term, productive home ownership.
Consider Your Equity
The most important consideration during the refinancing process is determining how much equity you have in your home and how much you're at risk of losing during refinancing. In fact, if your equity percentage dips too much, you may be required to purchase private mortgage insurance, or PMI.
In some cases, bringing in a large cash payment to boost your equity before refinancing is a smart and necessary maneuver. In other instances, even homeowners who are suffering from low equity situations may still be eligible for some refinancing options if they qualify under certain government lending programs.
Consider Your Financial Goals
For most people, the primary reason they consider refinancing their mortgage is to decrease their monthly payment. While this has some obvious short-term benefits, it's important to consider how doing so will affect the broader financial goals you may have for you and your family.
Having a frank conversation about your finances and what you'd like to achieve after a certain period of time is an important step in deciding on the desirability of your refinancing. Understanding your financial future will allow you to select the mortgage products that best support what you want to come next for you and yours.
Consider Your Future Moving Plans
If the home you currently own is not the home that you plan to spend the rest of your life in, that needs to be a factor in the refinancing process. A refinanced mortgage can sometimes be harder to discharge during a sale, and for many people, the increase in the amount you owe will severely hamper your sale profits. If you're planning to make your current home your permanent home, however, staying consistently invested can be a wise move to secure your future.
For more information, contact Bank of Blue Valley or a similar location.