When Should I Refinance? Finding the Best Time

4 Signs That Show It's Time for a Refinance

1: Interest Rate
One of the best signs to show that it is time to refinance your home is looking at your interest rates. There are two scenarios when interest rates can be a beneficial reason for refinancing your home.

When interest rates go low enough to bring your monthly payment down, this is an excellent time to refinance, extend your mortgage, and leverage the lower rates. Use our simple mortgage calculator to see if a refinance would save you money.

Also, if you currently have an adjustable interest rate and are worried about that rate going up, refinancing could move you to a fixed-interest rate loan and help you maintain a stable monthly payment.

2: Decrease Your Monthly Payment
You should also look into refinancing when you’ve paid off enough of your mortgage to make your monthly payments smaller. Refinancing will include an extension of your current loan time frame, allowing you to pay less each month. For example, if you are currently paying $1500 a month for your loan and are halfway through your loan terms, you could refinance, extend your mortgage, and have a lower payment each month. In some cases, this can make your monthly budget easier to manage.

3: Cash-Out Equity
Another great time to refinance is when you have the opportunity to cash out on your equity. You should take a cash-out refinance when your home value increases above your current mortgage amount. In many cases, you withdraw a significant amount of cash to use toward renovations, investments, or other expenses. Your new loan will cover the original loan amount and your cash-out equity payback.

4: Switching an FHA Loan to Conventional
For many people, the best time to refinance is when you are ready to change your home loan from FHA to conventional. FHA loans have many benefits when you first apply for one, but if it’s been several years, your credit score has improved, and you have built equity in your home, you may be able to save money, drop extra insurance premiums, and obtain a lower interest rate.

Let Cake Help You Know the Right Time for a Refinance

At Cake, we have mortgage professionals who can look at your current situation and tell you if this is the right time to refinance. As you wonder, when should I refinance, pick up the phone and call one of our experts to help you see how much you'll save today.