To refinance or not to refinance, that is the question.

To refinance or not to refinance, that is the question. This may not be as simple of a question as you may think. Refinancing involves time, energy and money. There are times when refinancing is not worthwhile and then there are times when it is advisable. . Let’s look at a few of the scenarios which may indicate that it is a good time to refinance:

1. The current rate is lower than your loan rate. There is not an easy formula of how much lower the rate needs to be for it to be financially profitable, but generally speaking, a difference of one percentage point can make a difference of hundreds of dollars a year. A savings of even $500 a year can make the process of refinancing worthwhile over the life of a 30 year loan.

2. Your credit score has improved. The Fair Isaac Corporation, or FICO, has a rating system that quite simply rates the amount of risk a lending institution sees in you as a borrower. If you had a poor FICO, and received a loan, you may have had either a bad rate, or loan terms which may be less than favorable. If you have been able to improve your FICO, it may be in your best interest to refinance. Contact a loan professional to see if you may benefit.

3. Your financial situation has changed for the better. Lenders make decisions based off of your overall financial representation. Should you change jobs and receive an increase in salary or maybe pay off a large debt, you may want to look at a refinance as well. Your overall financial picture of debt compared to income can impact your loan rate and loan terms. Another time to look at refinancing is if your home has changed in value. Many people like to pay off high interest credit card debt with the lower interest based on the equity of their home.

Everyone’s financial scenario is different, thus the answer to the question of to refinance or not to refinance depends on getting good financial advice from a trusted and knowledgeable loan professional.

Homeland Capital Mortgage is located in Tulsa, OK and makes home loans to first time home buyer to luxury home buyers.