You have probably heard that refinancing your mortgage can save you thousands. However, if you are like many homeowners you may have been swamped with misconceptions. So today we are going to be looking at some of the most common myths about there to put your mind at ease.
Interest Rates Are Too High Now
Lately, there has been a lot of news on the rising interest rates, which might make you think that you are too late to refinance since the best time to do so is when the rates are low. However, even with this recent interest rate rise, it is still a good time to refinance and still save money. Basically, they way to determine when you are going to be saving money is to figure out your break-even point. To find this you have to divide your closing costs by your monthly savings. For example, if your closing costs are $4,000 and you are saving $200 a month on your mortgage, the break-even point is 20 months. So after 20 months (just under 2 years), you will be saving money.
You Won’t Qualify
If you are trying to get your credit score back on track, in the past it was a more difficult to get qualified. When the housing market crashed a lot of lenders pulled out of the market and the ones that stayed were extremely careful. However, since then lenders have become more willing to qualify people. So people who probably wouldn’t be able to refinance in the past are now getting qualified.
Rates & Terms Change Only
Refinancing is not just about lowering your monthly payments or changing the terms of your mortgage. A cash-out refinancing can fund home improvement projects. Since property values have soared the past few years, these types of refinances have grown in popularity.
