Here Is the Best Time to Refinance Your Home

For homeowners in Charlotte, North Carolina, you know your home is a valuable asset—but it can be an expensive one, too. 

Refinancing your home is an excellent way to lower your costs or get the cash you need, but the timing of your refinance can make all the difference. Learn the best time to refinance your home in Charlotte, NC, and what to consider before you decide.

Reasons to refinance

Refinancing pays off your existing mortgage with a new one, and it’s a popular way to gain control over your finances.

You can use a refinance to lower your monthly mortgage payment, shorten your loan term, reduce your interest rate, or tap into the equity you’ve built. You can also refinance to change from an FHA loan to a non-FHA loan, or from an adjustable-rate mortgage to a fixed-rate mortgage (or vice versa). 

If you choose a cash-out refinance, you can receive a portion of your equity as a lump sum of funds, which you can use to pay off debt, upgrade your home, make repairs, or pay other costs.

Refinancing also comes in handy when you’ve jumped at a chance to buy your dream home, and want to adjust your mortgage now that the market has changed. The reason we say “date the rate, but marry the home,” is because refinance options let you fine-tune your mortgage while staying in a home you love.

Factors that Affect the Best Time to Refinance

When considering whether to refinance your home, several factors come into play. 

Interest Rates

One of the most significant factors that affect the best time to refinance your home is interest rates. When interest rates are low, it’s an excellent time to refinance, because the lower rates help reduce your monthly mortgage payment. On the other hand, when interest rates are high, you might not save money with a refinance. A common rule of thumb is to wait until interest rates are at least a percentage point or more below the rate on your current mortgage.

Credit Scores

Your credit score is another factor that can affect when you should refinance. If your credit score has improved since you first purchased your home, you may be able to qualify for a lower interest rate. That can save you money over the life of your loan. But if you’ve had some credit troubles since you took out your mortgage and your score has dropped, you might not qualify for the kind of rates that will help you save money.

Home Equity

Another factor to consider is your home equity. Equity is portion of your home you own. You can also think of it as the difference between the current market value and the amount remaining on your mortgage. If your home has appreciated in value, refinancing will give you a way to access that value in the form of a cash-out refinance. 

Loan Terms

Finally, consider which loan term is going to suit your current situation best. If you have a 30-year loan, you may want to consider refinancing to, say, a 15-year loan, which can save you money on interest payments over the life of the loan. On the other hand, if you’re struggling to make your monthly mortgage payment, refinancing to a longer-term loan can lower your monthly payments, although you’ll pay more in interest.

Try using our Mortgage Calculator to see how changing the terms and interest rates can affect your monthly payment and total amount paid.

The Best Time to Refinance Your Home in Charlotte, NC

When deciding when to refinance your home, it’s essential to consider the current real estate market. 

The Charlotte real estate market is experiencing a surge in home sales and home prices, which means that there is a lot of demand still. If you plan to sell your home in the next one or two years, you might want to think twice about refinancing; you might not recoup your costs before it’s time to move. On the other hand, you might earn a tidy sum from the sale of your home; it’s definitely worth checking with your lender or financial advisor to run the numbers on possible outcomes.

And, as you may already know, mortgage interest rates have been rising month over month. Depending on when you purchased your current home, you might not see enough of a savings if your only goal with a refinance is to lower your interest rate. 

But if you’re trying to switch loan products, alter your monthly payment, or go from a 15-year to a 30-year (for example), get prequalified to see what your rates might be. It could be worth it.

It’s essential to consider your unique financial situation before making any decisions. At Fairway Mortgage of the Carolinas, we know that a mortgage is a big financial decision – and you need a mortgage lender you can trust. We are here to help you find the best solution, whether that’s to refinance now, refinance later, or not refinance at all. 

Contact us to see personalized refinancing options that are tailored to your circumstances. We’ll treat you like family — and get you to the closing table, or your money back.