The COVID-19 pandemic has given rise to the overall cost of borrowing a loan amount as well as investing in a property. However, by using the best mortgage refinance calculator, borrowers can have a clear idea of how much loan they can afford to borrow. Refinancing can save a lot of bucks for homeowners who are facing a financial crisis and are under loan debt. Before discussing any further, let us learn more about mortgage refinancing.
What is mortgage refinancing?
Mortgage refinancing is the process of paying off the debts of the current loan by taking a new loan. The prominent benefit of applying for mortgage refinancing is that the borrower gets better loan terms as compared to the previous one, including low-interest rates, etc. The borrowers can choose to take the new loan amount from the same lender or a different one. This allows the borrowers to take care of their current financial crisis using the new loan amount. As the process of a new loan application is completed, the borrowers can start paying the EMIs of the new loan amount. The borrowers get increased long-term savings on interest with better loan terms and interest rates.
When is the right time to refinance your mortgage?
There can be tons of concerns or queries while wondering if is it a good time to refinance your mortgage. Keep reading through to get an in-depth clarification.
The timing of refinancing your mortgage can make a substantial financial impact. Here are some situations where refinancing a loan suits best:
1. When your current loan has not been very old and is typically in its first half of the tenure, it makes sense to refinance it. This is because during the first half, the loan EMIs are more focused on interest payments hence a refinanced loan can result in bigger savings.
2. If the lenders are offering significantly lower interest rates, it is probably best to go for mortgage refinancing. This is because the cost of homeownership comprises a bigger part of the interest amount. A cheap interest rate of a new loan can lead to low EMIs, shorter loan tenure, low-interest rates, and higher long-term savings.
3. Improved credit score is an ultimate sign that you can conveniently go for mortgage refinancing. A decent credit score of 750 or above tells the lenders that you are a responsible borrower and will repay your loan amount on time. They are also likely to offer you the loan amount at lower interest rates.
4. A consistent cash flow through one or multiple income sources gives you peace of mind knowing that you are capable of paying the loan amount on time. However, the financial crisis talks otherwise. Thus if you are unable to pay the current loan amount and wish to set up a business for generating higher income, you can readily apply for mortgage refinancing.
Now that you have decided to refinance your mortgage, it is essential to get in touch with a suitable lender and make the right financial move!