It can be hard to know whether or not you should refinance, let alone what the best time of year to refinance your home is. There are so many things to consider, and the time of year is definitely one of them. According to Bankrate, 30 year loan rates increased by almost 5%. They are higher than they were in 2012 and 2013, yet still aren’t as high as they were in 1981. In 1981 the mortgage rates hit almost 20%.
Many suggest that if you can decrease your rates by at least 1%, that you should consider refinancing. However, there are other things worth considering as well. It is important to consider things like how much it will cost to refinance your home, as well as how much time you actually plan on spending there. There are many online tools that calculate these things for you. They make it easier to come up with a solid game plan.
It is tempting to refinance just because you could cut your monthly payment a little bit, however that isn’t always the case. Refinancing isn’t free, and you have to take many things into consideration before you decide to refinance.
It is also just as important that you know when to not refinance. For example, if you have had the same mortgage for a long time, you will end up paying interest you have already paid. Sometimes, mortgage companies have something called a “prepayment penalty”. This only gets higher with time. Another situation is if you are planning on moving in the next few years.
While mortgage rates can always be expected to rise, fall, and repeat, refinancing will always be one of those super important decisions. Before you refinance, ask yourself what you goals are. Are you trying lower your monthly payment? Trying to get some extra cash? If your goal is to lower your payments, make sure you don’t plan to move within the next 5 to 6 years.
Your credit history is another big consideration. With bad credit, you won’t end up getting the great rates that you see advertised. Those are rates for someone with ideal credit. Before deciding to refinance, consider whether or not your credit is better or worse than it was before.
When you refinance more than 80% of the total value of your house, you will likely need to have private mortgage insurance. This is another thing to take into consideration.
However, one of the most overlooked aspects of deciding whether or not to refinance is the time of year. The time of year actually makes a big difference. As you get closer to the end of the year, those working in the financial industry are getting ready for their end of year bonus checks. At this time, loan officers are looking to close more loans.
The company’s year may not coincide with your year, however. We are referring to a fiscal year, which is specific to each company. At the end of the company’s fiscal year, their loan officers will be getting ready for their bonuses.