Some say the housing market in area is going up. Is now the right time for you to refinance your home? Corey Blake from New Horizons Credit Union joined us on Studio10.
Below is a look at some of the questions and answers discussed on the show.
How does a homeowner decide if a mortgage refinance makes sense?
A smart decision requires weighting different factors that vary based on each homeowner. Consider a few short and long term goals like:
-Is your mortgage interest rate 1.5% or more higher than current rates?
-Will you be staying in the home at least 5 years or are you going to be moving soon?
-Are you looking to consolidate other debts with the available equity in your home?
Know you goals. The number one reason that homeowners refinance their mortgage is to lower their payment. With a refinance, homeowners can lower their monthly payment, giving them more money in their pockets.
How does someone determine if the timing is right?
You need to consider whether or not you are in a stable enough situation with your job, income and the local housing market. If you have been at your job, or in the same industry for two or more years, now might be a good time. But if you recently lost your job or had your income reduced, then you need to wait, trim your expenses and work on improving your income situation.
Look at other houses that are selling in your neighborhood. Are they selling well or is the market still down in your area? Make sure the home values in your area are stabile.
When is it smart to pay other debts?
If you have significant amounts of outstanding debt AND a good amount of equity (say 30% or more), then you would be in a position to consider consolidating. Before you take that step, make sure you know the positives and negatives. If you are paying 15% on a $10,000 credit card debt and consolidate, you effectively lower the interest rate to say 4%, or whatever your mortgage rate would be. However, that debt will now be paid back over the same term as your mortgage loan, which is usually 15- or 30-years. This means it will reduce your payments in the short term, but because you pay for it over a far longer period, your expense is greater.
New Horizons Credit Union
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