When is the Right Time to Refinance?

There are a number of reasons for homeowners to consider refinancing their home. But such a decision should only be made after a lot of thought and should never be made lightly. There are a number of reasons why it may make sense to refinance your home provided all the conditions are right.
Some of these reasons may be:

  • Lower Payments – A change in interest rates, payment of a point or two of interest, or even a rise in your FICO score can make it worthwhile to consider refinancing. If you plan to move within a few years this may not be a good option as fees to refinance may outweigh the benefit of lower payments and result in a net loss.
  • Loan Conversion – If you took advantage of an adjustable rate mortgage (ARM) or balloon program loan, converting to a traditional 10, 15, or 30 year fixed rate mortgage (FRM) may be advisable. An ARM loan can experience a rise in payments, sometimes substantially should the market rate that the loan is tied to increase. A balloon program offers lower payments for a fixed term, usually 5 to 7 years, with a large payment at the end.
  • Cancel Private Mortgage Insurance (PMI). Low down payment options allow buyers with little down payment to obtain a mortgage, but usually require private mortgage insurance to protect lenders from default. Increased home equity can allow cancellation of the PMI, however, the final decision is up to the lender.
  • Cash Out Equity – Most homes increase in value over time and can be a resource for extra cash to put toward another property, college tuition, home improvements, or paying down higher interest debt.

Ultimately, only you can decide whether or not to refinance, but you’ll want to gather as much information as possible to decide if the conditions and timing are right for you.

As the largest independent title agency in Arkansas, First National Title Company (FNTC) can assist in closing your transaction, often at a savings on closing costs. We have FNTC locations in Little Rock and all around the state for easy and convenient access.

For more information on the refinancing process, you may contact us online, or stop by one of our 9 convenient locations around the state (listed at the bottom of this page).