When Should I Refinance My House And Things To Consider

Acquiring the finances to become a homeowner may be a bit challenging. You may consider taking a mortgage and purchase the home of your dream. However, you may need another loan when you’re in dire need of cash.

You may need the cash to pay off an existing mortgage. It may be a case where you need to apply for another mortgage with a lower interest rate. You never know when you may need the cash to deal with an emergency.

When to opt for Home Refinancing

You can apply for refinancing to secure another loan with a low-interest rate. However, you should keep in mind some of the considerations that come with home refinancing. Here are some reasons to consider home refinancing.

Build Equity

There are many ways that you can build your home equity and make a profit when you decide to sell. Although home refinancing may sound like lurking in heavy and unending debt, it may be a solution to your cash needs. You may need the cash to remodel your home when looking to sell.

Thus, you may apply for home refinancing and acquire the funds to increase your home’s value through remodeling or renovation. Home refinancing can be a way to consolidate your existing debts. It may come in handy when applying for a low-interest rate to cover the existing high-interest loan.

Reduce Loan Terms

In some cases, you can opt to refinance to cover an existing loan for another loan with short terms. You can apply for refinancing to opt for a loan with short repayment terms and won’t change much in your monthly repayments. Refinancing can help you cut down on your monthly terms while benefiting from another loan (https://www.valuepenguin.com/small-business/commercial-real-estate-loan).

This way, you can acquire the finances to cover your financial emergency. In the long run, you can cover your financial needs without changing your repayment plan and installments.

Factors to Consider When Refinancing Your Home

Before making the final decision on home refinancing, take time to go through some essential factors.

Do Your Math

Go through the state of your finances and know where you stand. This way, you can opt for other methods to finance your cash needs and avoid increasing your debt. Furthermore, you avoid losing your home should you be unfortunate with your repayment plan.

Is home refinancing your last option? How far behind are you on the existing loan that you need to consolidate? Consider your options and do your calculations. Determine how much it will change your monthly repayment installment.

Consult an expert to help you know your options and make the right decision. This way, you can plan on different ways to repay your new loan that comes with short terms.

Home Equity

It is imperative to know your home’s value based on the market value. Your home’s equity is one of the criteria used to determine whether you qualify for home equity. Know your home’s worth and consider some different ways to increase your home’s value.

Credit Score

Your credit rating also determines whether you qualify for home refinancing. It shows your ability to meet your repayment obligation and how much you can get for your second loan. Lenders are prone to change their loan approval terms, and you may miss out on a low-interest loan even with a good credit score.

You may still qualify for home refinancing with an unimpressive credit score. However, your options may be limited to mortgages with high-interest rates. This can toll heavily on your finances, and you may struggle to meet your repayments.

Consider your options and go through your needs to know what works out best for you. Don’t take a loan that you don’t need, and make sure you evaluate your books. This way, you can apply for a mortgage without breaking your bank.

A Broad Overview Of Renting Vs Buying

We’re all familiar with the American dream- a white picket fence, 2.5 kids, and being a homeowner…right? The older we get, the easier it is to see just how complicated it can be to own a home. In fact, in many instances, renting may be a much more practical option. So what is the right move for you? Let’s discuss the different aspects of buying vs renting a house. 


 One of the most favorable parts of renting a home is that bills are predictable. Your rent will not change month to month, and most of your utilities will stay relatively the same. The same is not true, however, when it comes to owning a house. If something breaks or busts or bruises, you could have a hefty and unexpected bill on your hands. With renting, you can make a clear and easy budget and usually stick to it (within a few dollars here or there in the warm and cool seasons). If you are right out of college and new to the workforce, this may be the most practical option for you. 

You break it, you buy it!

 When something breaks in a rented property, it is usually the responsibility of the landlord to replace it. However, if something breaks in a home you own, you could be responsible for hundreds or even thousands of dollars to repair or replace it. 

Money talks

 The financial breakdown of renting vs. buying a home can be confusing. On the one hand, renting a home can feel like essentially throwing money away every month as you have no equity in the property. You may also be surprised, in some areas, a mortgage (https://www.rocketmortgage.com/learn/what-is-a-mortgage) is more affordable than a monthly rent payment. When you own a property, you also have equity. Should something happens, you have an asset in your property. There are also other financial factors to consider, however. Things like property taxes, trash pickup, pest control, homeowners insurance, etc., can really add up! Another huge cost is the amount of interest on your mortgage. If you are paying long-term, there is a huge potential that you are paying way more than the property is even worth. 

Location, location, location

 Another thing to consider when it comes to renting vs. buying is how long you want to stay in the area that you’re in. As a renter, it is easy to pick up and move. If a new job opportunity comes your way, it isn’t hard to relocate with just a few month’s notice. Buying a home often ties you to one location (based on your financial situation), so if you’re not totally happy in the city that you’re in, buying may not be the best choice for you. While it’s true that you can practically sell your house at any time or maybe rent it out, these decisions take a lot of time and effort and are not choices to take lightly. 


 Another thing to consider is the time and effort that you need to put into a purchased property vs. one you are just renting. Will you have time to clean the gutters? Mow the lawn every week? Give it a fresh coat of paint every year? Houses are a lot of work, and it should not be underestimated how much time, effort, and energy they require. If you are someone who travels a lot or who works many nights and weekends, owning a home may not be the best option for you. Yes, you can always pay somebody to help with these pesky projects, but you will spend an arm and a leg over time if you primarily rely on delegation. 

 When it comes to renting vs. buying, only you know what is right for you! All of these factors, and many more, are ones you should consider while making such a big decision.