The best time to refinance is evaluated according to several factors. These can vary according to the individual but you have to assess your situation. Some of the points that should be considered are listed as follows:
-Is the current rate of interest on your mortgage lower than the present interest rate? -Is the interest rate higher than your current rate? -What other options are available for refinancing?
It is theoretically only viable to refinance if there is a lower interest rate that is lower than your present by two points or percent. This however can extend to a difference of one and a half points at times where it is necessary to weigh other expenses associated with the transaction. It is also seen that there may be other perks such as lenders offering zero point loans and other low cost refinancing options and this means even if the interest rate is only lower by less than one point that you may still benefit from refinancing your mortgage.
People use cash out financing for many reasons. Some of these include:
-Debt consolidation -For education purposes -For investment purposes “To buy a new car -To buy a home
When looking into refinancing using the cash out method you must ensure that you are able to repay the loan in the new time period and that you do not create more debt such as through credit cards. This means maintaining your spending ratio at a comfortable but not extravagant level. You make your property investment or purchase then maintain a budgeted spending plan until you recoup your property investment profits. This is essential towards being successful in your endeavour.
You may even benefit from refinancing if it is done at a time when interest rates are lower and can repay the mortgage over a longer time but at a lower repayment amount. You have to talk to lenders and determine the cost of refinancing and once this is assessed you will be able to determine how long a time it will take to get back the cost of refinancing. All you have to do is divide closing costs by the difference in new and old repayments. This is an easy way to determine the costs of refinancing.
There is a lot more to think about as well when considering expenses and these will be further dealt with in more detail and cover factors such as appraisal fees and attorney fees to name a few. All these must also be considered by you before you move towards building out your property portfolio. Building a property portfolio is a great investment opportunity and refinancing is one of the methods that you can use to achieve this goal once the circumstances are right.
Carefully assess all the factors discussed and decide whether it is the right time for you to refinance and invest in building out a property portfolio.