Is now a good time to refinance?
Refinancing in South Carolina can be a good financial move depending on several factors, such as interest rates, your credit score, and your long-term financial goals. Right now, interest rates have fluctuated due to recent changes in the economy, so the best time to refinance is when you can secure a lower interest rate than your current mortgage or loan rate. Here are a few things to consider when determining if now is the right time for you to refinance:
Key factors to consider:
1. Current mortgage rates
If rates are lower than your existing mortgage rate, refinancing can save you significant money by reducing your monthly payment and the total interest paid over the life of the loan.
In recent years, interest rates have been rising, but there could still be pockets of opportunity depending on your location and lender.
2. Break-even point
The “break-even point” is when the savings from the lower interest rate offsets the costs associated with refinancing (e.g., closing costs). If you plan to stay in your home beyond this point, refinancing may be worthwhile.
3. Loan term
Refinancing can allow you to change the term of your loan. Switching from a 30-year to a 15-year loan can increase monthly payments but reduce total interest paid and help you own your home sooner.
Conversely, switching to a longer-term loan can lower monthly payments, although you’ll pay more interest in the long run.
4. Credit score and financial health
If your credit score has improved since you first got your mortgage, you may be eligible for better rates. A higher score can help you secure more favorable terms.
5. Home equity
Lenders generally require you to have at least 20% equity in your home to qualify for refinancing without paying private mortgage insurance (PMI). If you’ve built up substantial equity, you can even explore a cash-out refinance to use the money for other investments or expenses.
A cash-out refinance can provide a valuable solution if you’re a homeowner with sufficient equity and some debt to pay off. A cash-out refinance is a home loan that allows you to refinance your existing mortgage while taking out additional cash beyond your loan balance if you have enough equity. At Mortgage Equity Partners and most other lenders, 20% equity is required to use the money to consolidate debt or for other investments or expenses
6. Closing costs
Refinancing comes with fees (appraisal, application, title search, etc.) that usually total 2-5% of the loan amount. Be sure to weigh these costs against potential savings.
7. Rate type (fixed vs. adjustable):
If you’re currently on an adjustable-rate mortgage (ARM) and are concerned about future rate increases, refinancing into a fixed-rate mortgage can provide more stability.
Would you like to look at current mortgage South Carolina rates or run some numbers to see how much you could save by refinancing? Visit our Refinance Center for common FAQs and links to our refinance calculator or contact one of our knowledgeable loan officers today!
