What You Need to Know about Refinancing Your Mortgage

The tides are changing in the Australian real estate scene. Becoming a homeowner is starting to get less affordable for the average family, while mortgage rates are rising, according to the latest reports. This has left many people in a tight spot, and just like them, refinancing the mortgage might be on your mind. You may have already calculated the break-even point, and feel good about the idea, but there are still a few things left to evaluate before taking on a new loan. Take a look our at list and see if refinancing is the right option for you.

When to refinance

This may go without saying, but choosing the right time to refinance is of vital importance, since it brings you back to square one with your loans. Refinancing a 30-year-long mortgage while you’re 20 years in is vastly different when refinancing at only 10 years in. Refinancing later can result in higher interest rates, or higher monthly payments, which can be critical for your bank account. Don’t be intimidated by lesser known bank terminologies, or the urgency propagated by the news. Take the time to decide if now is the right time to make a move, and if there are alternative options.

Check your qualifications

If you are still in the first few years with your loan, and there are no apparent monetary issues, consider checking whether you qualify for refinancing. Getting a new loan can be an ordeal with the paperwork and background checks, which is why preparing possible backup plans beforehand can be crucial. So, what are the things you should check?

  1. Make sure your credit score is over 720, to be viable for the lowest possible interest rate;
  2. Your employment situation and prospects; don’t refinance unless you are certain you will have a steady income in the following period;
  3. Appraise your home, because if your home has decreased in value, the mortgage will end up costing more than the house itself

Home equity

One of the most important things you can do for your refinancing plan is to evaluate your equity. This is a regular demand when getting a new loan, but it can do no harm to appraise your home before making any kind of move. If the house has lost its value over the years, it is possible that you will face paying private mortgage insurance, which is an additional cost on top of the mortgage principal and interest. One easy, hassle-free way is to contact an agency online, like Bridgebury Real Estate, and book an appraisal.The sooner, the better it is for your long-term plan.

In summation

Homeowners never seem to catch a break when the real estate market and the economy shift ever-so-rapidly. The key to saving your family and yourself from stress, debt, and possible bankruptcy is to stay informed. Speak to your realter, evaluate your equity, see how well you stand with your credit and income. There is nothing worse than being caught off guard, and no one wants to gamble when the risk is losing the roof over their heads.All the information that will keep you safe is available online and more accessible than ever. The only thing remaining is to stay focused, look for the best opportunities and stay on your toes. Good luck!