When is the optimal time to refinance a MI home mortgage loan?
Refinancing a MI home loan can have its benefits. It is a decision which should be approached with caution, as the roof over your head is involved. Yet, done right, at the right time, it can make a lot of sense, and may be one of the best money moves you can make.
Here's when to consider a refinance, and some alternatives to consider as well…
When it Really Saves You Money
Make sure you go over the math carefully. Check to see if you are really saving on interest rate, total interest paid, and monthly payments. How much you’ll really save will greatly depend on how long you will keep that property and loan. It may not make sense if you are confident you will move, sell, or refinance again in the next 18 months. It may be vital if you plan to stay long term.
Accessing Money for Investing
A cash out refinance may be a smart financial move if you are confident that you can generate great investment returns with that money. For example; if you can borrow money at 4%, and can earn 12% returns on an investment, that could be wise. Just remember, that few investments are really guaranteed. Be cautious about risking your family home on a speculative investment.
When Lenders are Hungry
Banks and mortgage lenders go through different phases and cycles themselves. Sometimes they are more cautious and difficult. They can make it really hard, expensive, and unappealing to get a loan. At other times, they are really hungry and aggressive. During these times they compete against each other, offer special deals, lower the requirements to get a loan, and make the process easier. This is true right now, especially when it comes to refinancing.
When Your Home Value is Peaking
Home values are constantly influx. They go up for a few years, and then down, and back again. It can be dangerous to be overleveraged and find yourself owing more on your home than it is worth. In those scenarios, it may be impossible to refinance or sell your home. You are stuck with your property and payment. However, if your home has appreciated a lot, or has a lot of equity because you paid cash of put down a large down payment, you may not want that to be locked up for years. You may want to get access to it now for emergencies. Just be careful in striking a good balance, and getting a loan that matches your personal plans and timeline.
Instead of refinancing your Michigan home loan you may find a line of credit or second mortgage is a good move. Or if you are trying to minimize the impact of high rate debt from other creditors a debt consolidation loan or balance transfer to a zero percent interest credit card may help.
This could be the ideal time to refinance your home. Just know your options, and get a loan that works for your goals.