Sponsored Content: When mortgage refinance rates are on the rise, it might seem like a bad time to refinance. However, even market conditions don’t seem favorable for everyone, it might still be a good time for you to refinance based on your unique circumstances. Lenders like Discover® offer competitive mortgage refinance rates at all times.
Evaluate where you are in terms of paying off your mortgage and what your upcoming financial goals are to determine if the timing is right for you. Here are important questions to ask yourself when assessing if now is the best time to refinance your home.
Can You Reduce Your Mortgage Rate By At Least 0.5-1%?
Even in unique economic conditions when interest rates may be rising, it could be possible to lower your mortgage rate by 0.5-1%. Refinancing doesn’t always mean another 30-year mortgage — if you can find a shorter-term mortgage with a lower interest rate, you’ll be able to pay off the loan faster and with less interest.
Do You Have Too Much Equity, Too Little, Or Just the Right Amount?
If you have less than 20% equity in your home, you’ll likely want to wait before refinancing until you’ve built up more equity to avoid potentially higher interest rates and higher fees. On the other hand, if you’re close to paying off the mortgage, it may not make sense to refinance. Be sure to find out if you’ll end up spending more on closing costs and prolonging the mortgage than if you stay on track to pay it off.
Do You Have Renovations That Can Be Covered by A Cash Out Refi?
A cash out refinance gives you access to cash in addition to updated loan terms on your mortgage. The amount of cash you have access to depends on how much equity you have in your home, and cash out refinancing can be used to potentially increase the value of your home through renovations.
A cash out refinance can be an excellent option for taking care of the cost of your next home improvement project, consolidating high-interest debts, or paying for other large expenses. If interest rates aren’t great and you can wait to access funds from your equity, it can’t hurt to build up your credit score as well as more equity in your home so that you can have more options when you’re ready to refinance.
The Bottom Line
Trends in the market should not dictate your life choices, but they can inform your major financial decisions. Once you’re in a good position to refinance your mortgage, check to see what different lenders are offering so you can decide what will work best for your personal circumstances.
About Discover Home Loans
Discover Home Loans provides home equity loans and mortgage refinance options with a range of benefits for qualified homeowners. Find options that fit within your budget at discover.com/home-loans. © 2023 Discover Bank, Member FDIC | NMLS ID 684042