When to Refinance a Mortgage

Are you thinking of refinancing?

Owning your own home is certainly something to be proud of, but when it comes to the economics involved, most of us would rather not think about it unless we absolutely have to.  But as a homeowner, you can take advantage of your investment and use your home to work through other financial burdens, debts, and month-to-month living expenses that might have changed recently.  Refinancing your home can be a gateway into a life of financial prosperity, but on the other hand, timing is everything.  There are some things to keep in mind that will keep a refinance move from backfiring and causing you grief.

Consider the Following

Right now interest rates are at historical lows, and because of this, lowering your monthly mortgage payments might be exactly what you have been waiting for to get the jump on other debts.  Here are some things to keep in mind when making this decision.

What you Stand to Save by Refinancing

Locking in a lower interest rate is likely the first thing on your mind, especially if you are dealing with an Adjustable Rate Mortgage, which can fluctuate depending on the going interest rates.  To have that control, locking in a reasonable rate is a good idea, rather than risk your rate going up soon enough.  While you are refinancing, there may also be additional options for you to shorten the term of your current loan so that you have fewer payments overall.


How long do you have to keep your home to break even after refinancing? A lot of this depends on the rate you get for refinancing.  Discuss this with your lender to make sure that such a move is worth your time or effort.  Consider how long you plan on being in your home or any upcoming financial pitfalls such as potential layoffs or life-changing events that might be problematic.


Refinancing can be a great option for you and your family, especially if current interest rates are at least 1% lower than your existing rate, or if you plan on staying in your home for at least another 5 years.

When Not to Refinance

It is always tough to gauge exactly how low-interest rates are going to trend.  Right now, we are looking at some of the lowest rates in decades, and there’s been some wiggle room for them to fall even more, but there are good reasons not to refinance and just hold onto the rate you have.

  • If you are approaching the end of your term, now is not the time to refinance.  With a typical cost of 2-5% to refinance your loan, shaving off a little bit of money per month is not worth putting yourself into a longer-term loan when you are close to having the whole thing paid off.  Remember, $0 per month on a mortgage is always better than a small difference each month, even if you have to endure if for several months.
  • If property values are falling in your area, you could find yourself having your home undervalued in assessment and losing out on what you once thought was a potential goldmine.
  • If you have too little equity or time between refinancing loans, this might affect your credit score and a lender might not consider your loan with an acceptable rate.  You should refinance only if you are sure you will be approved for the loan.

Talk to Cash Time!

When you are in need of cash quickly, Cash Time is your go-to source.  From title loans, personal loans, refinancing, and other ways to help you work through debts, hardships, or getting your finances in order, we have the resources you are looking for.  Contact us today to see how we can help!