top of page
  • Writer's pictureDamon H

When To Refinance

Updated: Jun 22, 2023



Refinancing your mortgage can be a smart way to save money and lower your monthly payments. But how do you know when is the right time to refinance?


Here are some factors to consider before making the decision to refinance.


Interest Rates

One of the main reasons to refinance is to get a lower interest rate on your loan. A lower rate can reduce your monthly payment and save you thousands of dollars in interest over the life of the loan. However, refinancing is not free. You will have to pay closing costs and fees, which can range from 2% to 6% of the loan amount. Therefore, you need to compare the savings from the lower rate with the costs of refinancing. A general rule of thumb is that you should refinance if you can lower your rate by at least 0.75% to 1%.


Loan Term

Another reason to refinance is to change the length of your loan. For example, if you have a 30-year mortgage, you may want to switch to a 15-year one. This can help you pay off your loan faster and save on interest. However, this also means that your monthly payment will increase. You need to make sure that you can afford the higher payment and that it does not affect your other financial goals. Alternatively, you may want to extend your loan term if you are struggling with your current payment. For example, if you have a 15-year mortgage, you may want to switch to a 30-year one. This can lower your monthly payment and give you more breathing room in your budget. However, this also means that you will pay more interest over the life of the loan and that it will take longer to build equity in your home.


Home Equity

Another factor to consider is how much equity you have in your home. Equity is the difference between the value of your home and the amount you owe on your mortgage. The more equity you have, the more likely you are to qualify for a refinance and get a better rate. You also need to have at least 20% equity in your home if you want to avoid paying private mortgage insurance (PMI), which is an extra fee that lenders charge to protect themselves from default. If you have less than 20% equity, you may still be able to refinance, but you will have to pay PMI or accept a higher interest rate.


Personal Goals

Finally, you need to think about your personal and financial goals and how refinancing fits into them. For example, do you plan to stay in your home for a long time or sell it soon? Do you want to use some of your home equity for other purposes, such as home improvement or debt consolidation? Do you want to pay off your mortgage sooner or later? These questions can help you determine whether refinancing makes sense for you and what type of refinance product suits your needs.


Refinancing can be a great way to save money and achieve your financial goals, but it is not a one-size-fits-all solution. You need to weigh the pros and cons of refinancing and compare different offers from different lenders before making a decision. If you need help with refinancing, contact us today and we will guide you through the process.


Keep it Foxy,



Mr Foxy














"Mr Foxy"

Damon H

Sales Manager & Founder

2 views0 comments
bottom of page