When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
When is the Best Time to Refinance My Home Loan?
It is beneficial to know the right time to refinance your mortgage in KC. You don’t want to wait too long or jump the gun, but the ever fluctuating housing market can make getting the best deal a tricky endeavor.
Therefore, your individual situation should be the defining factor on when you can refinance. The best time to refinance your home loan is usually:
- When it can save you the most money
- When you are able to afford paying closing costs and other associated fees
When Can You Save the Most Money?
What are your potential savings relative to the cost? This question may seem obvious, but you want to refinance when it can save you the most money. If refinancing will hurt you in the long run, it’s best to wait.
Are You Able to Afford Associated Fees?
There are many fees associated with refinancing a mortgage in KC, such as
- Closing costs
- Application fees
- Loan origination fees
Being able to afford these fees can make or break whether or not it is your best time to refinance. If you can’t afford the fees, hold off until you can. Trying to refinance when you cannot afford it may cost you more money than you realize.
Is it Too Early or Too Late?
Often, if you try to refinance too early, your home has not built up enough equity in order to be used as an asset in the refinancing process. By trying to refinance in the early years of owning your home, you will not have the assets necessary to refinance your mortgage in KC. While it is a good idea to wait until you have lived in your home for a few years before refinancing, waiting too long will make you restart the amortization process. As a result, your monthly payments will once again go towards interest rather than your loan’s principal. This switch will make it harder to build home equity in the future.
If you try to get into the refinancing game too late, you could miss out entirely. By choosing to not refinance your mortgage in KC when the time is right, you can potentially lose thousands of dollars in savings.