When Should You Consider Refinancing?

San Jose Real Estate Podcast with Linda Chu

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A lot of homeowners have been making the decision to refinance. We wanted to explain the process in a little more detail today so you can determine if it’s the right move for you.
First of all, there are three important factors to consider that may affect your interest rate. They are your income, assets, and credit. If any of these factors change over time, you may be able to get a better rate.
For example, let’s say a borrower has a score of 680 when applying, but a couple of years later their credit has improved to 740. With a score of 740 or above, the borrower can get the best interest rates, which will significantly lower their payment.
Here are a few terms you should be familiar with. The first is your loan-to-value ratio, or LTV. The lower the LTV, the lower your interest rate will be. The second is your debt-to-income ratio, or DTI. It’s your monthly debt divided by your monthly income. Generally speaking, this ratio should be no greater than 43%.

A better credit score equals a better rate.

The conclusion here is that if your loan scenario has improved in any way since you got your mortgage originally, it makes a lot of sense to refinance.
What if your scenario has not changed? Well, with interest rates as low as they are right now, it still makes sense to refinance. See how much you can save on your payment; we have tools that can help you with that.
There are rumors that rates are going to go up this year, so take advantage of them while you can.
If you have any questions for us about refinancing or real estate in general, give us a call or send us an email. We would love to hear from you.