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Refinancing can offer many benefits including saving you a lot of interest expense over the life of the loan. From lower monthly payments to long-term overall savings, this is reason enough for most people to make the decision to refinance. With mortgage rates being the lowest they’ve ever been, you may be wondering if you should refinance your home loan now.

How can you be sure that you’re ready to refinance your loan? You may want to refinance your home loan now if:

Your current mortgage rate is 0.50% higher than today’s rate for the same term

For those that are interested in maintaining the same or similar loan term, we generally tell customers it makes sense to refinance if there is a benefit of 0.50% or more vs. their current rate.  For example, if your current rate is 3.50%, we would suggest refinancing if you can obtain a rate less than 3.0% with no origination fees.  It is important to check the loan estimate to ensure you are not paying points with your refinance unless you choose to buy down to a lower rate.

If you closed on your home loan prior to July of 2020, odds are, your current mortgage rate is higher than current rates with Filo Mortgage. Lowering your interest rate can reduce your mortgage payments each month, which in turn, will lower the overall cost of your mortgage.

Waiting to see if rates go even lower than they currently are can be risky, and refinancing now enables you to take advantage of rock-bottom rates.

You have enough home equity

If you’ve had your home for a while and built up enough equity, you may be eligible for a cash-out refinance, which is another good reason to refinance. With a cash-out refinance, you’d borrow from your home equity and receive the difference in cash. If you have the equity in your home and want to use the cash to take care of certain expenses or to make a big purchase, refinancing can be a good solution. People use the cash they receive for many different reasons, such as paying for medical expenses, renovating their homes, or paying for college tuition.

Be sure to double-check your home’s value, too. Many homeowners are surprised to learn just how much equity they already have, and if your home has increased in value, you may have more equity than you realize.

Requirements for cash-out refinance loans will vary, but oftentimes, borrowers must have at least 20% equity in their homes to qualify for a cash-out refinance. Refinancing with less than 20% home equity may be possible, but it could also mean a higher interest rate. If you have less than 20% home equity, you may want to wait until you’ve built up enough before taking out a cash-out refinance. But with low market rates and sufficient home equity, it may be the right time to consider moving forward with a cash-out refinance.

Your credit has improved

Good credit is needed to qualify for the best available mortgage rates. Your initial interest rate may be based on higher market rates, as well as a lower credit score. When rates are low and your credit score has improved, refinancing soon can be a smart financial decision.

Refinance your mortgage soon 

If you’re ready to take the next step toward refinancing your mortgage as soon as possible, contact Filo Mortgage today. We’ll go over the different options with you and help you make an informed decision for refinancing your home loan.