Best Time to Refinance Your Mortgage
It is a well acknowledged fact that one usually thinks about mortgage refinancing when he finds the current interest rate in the mortgage market lower than his existing interest rate. However, apart from the external factors, there always remain some individual circumstances that prompt a person to consider mortgage refinance.
Debt to Income Ratio- A lender would ascent to your proposal of mortgage refinancing, when he finds your debt to income ratio is impressive enough. Either you have to prove that your income level has increased. Or you have to diminish your outstanding debt. You may have a car loan or an unpaid student loan. But if you could reduce those debts amount by a significant level, things could be easier for you to qualify for mortgage refinancing plan.
FICO score- A lender is likely to check your credit score before agreeing a refinancing model. A higher credit score will crack your chances of getting favorable refinancing option for you home mortgage. You may have lower credit score when you first purchased the home. But if your credit score increases by the time you are applying for refinance, this could be an ideal time for getting favorable terms and condition for your mortgage.
The valuation of your property- You should be always vigilant to the current market value of your own house. If the value of your property climbs up, you should grab this opportunity. If your house retains a good equity, it is the best time to ask for mortgage refinancing.
Current mortgage market trend- You also require to get in touch with present market scenario. If you are paying at a fixed rate of interest, you can compare it with the current mortgage rate. You can opt for refinancing or stick with the existing rate depending on your evaluation of the mortgage rate. However, in case you are under an ARM (adjustable rate mortgage), you should consult a financial planner to understand how much payment you might have to make provided the interest rate rises.
written by Myrina Stein
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