There are a number of reasons why people choose to refinance their homes. Low interest rates can be inviting, as they often signal an opportunity for homeowners to pay less on their monthly payments if a homeowner can lock into that low rate.
However, refinancing isn’t for everyone. For some homeowners, it is better to stay with your current mortgage rate than go the refinance route. We’ve culled together our list of what you should know before you refinance.
Credit Scores Are Key
The low refinance rates don’t apply to everyone. These rates are usually reserved for homeowners with the best credit scores. It’s good to know your credit score and if it’s on the lower end, take the time to build it back up. It’s also important to pay attention to the amount of your loan. For instance, taking out a loan on more than 80% of your home can often result in an increase in your interest rate – not a decrease.
Term & Penalty
Time may or may not be on your side. If you haven’t been in your home for very long, you may not have enough for the savings to outweigh the cost when it comes to a loan. Interest rates are typically more attractive for shorter loans. If you have a 30-year-loan on a home you have been in for a while, you can refinance for a 15-year-loan and the amount you save could be considerable over time.
For many homeowners, home mortgage interest is their largest deduction. Lower interest rates mean a smaller deduction, so it is important to plan ahead for tax purposes. No one likes a surprise at tax time!
If you’re considering refinance for a Nashville home, consider talking with a real estate agent or a lender. If you’re looking for a fantastic Nashville home, we’re here to help! Give us a call or drop us a line today.