Well, you have to weigh ought the benefits of refinancing versus your upfront costs to make an informed decision.
If refinancing your loan saves you money, there’s a good chance you should do it.
Three Things to Consider
- Break-even rule: Refinance may be worth it if savings outweigh the closing costs
- Lowering your monthly payments
- No closing-cost refinancing (this makes the decision a lot easier)
Benefits of Refinancing Your Loan
- Cancel your mortgage insurance (if you’ve built enough equity)
- Cash-out using your home’s equity for a special occasion or renovation.
- Consolidate debt
This depends on the type of loan you have. For VA and conventional loans, they typically require a credit score of at least 620 for refinancing. FHA loans typically require 580 or higher.
Frequently Asked Questions
How can I calculate my refinance savings?
Take your closing cots into the calculation. This includes title, escrow, and origination fees. You also need to make sure you are looking at your interest savings, not payment savings.
How does a no-closing cost refinance work?
You still have closing costs, you just don’t pay them upfront. You can either finance them or choose a higher interest rate.
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