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3 signs it’s safe to refinance your mortgage again
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Homeowners looking for a way to cut mortgage costs have been stuck with few options in recent years, thanks to an elevated inflation rate and a higher federal funds rate geared to lower the former. That left mortgage interest rates exponentially higher than they were just a few years ago, at one point hitting their highest level since 2000. But as inflation has steadily cooled from over 9% in June 2022 to just over 3% now, the interest rate climate has adjusted, too.
While still absent a formal cut to the federal funds rate (that could come later this year), some lenders have already started offering lower rates in anticipation. While not dramatically lower than what was being offered earlier this year, mortgage rates are seemingly on a downward trend, leading some homeowners to wonder about refinancing.
To that end, below we’ve broken down three signs that it may be safe to refinance your mortgage again.
Start by seeing how much lower a mortgage rate you can secure here now.
3 signs it’s safe to refinance your mortgage again
Not sure if it’s quite safe to refinance your mortgage? Here are three signs that it may be:
You can secure a mortgage rate one percentage point lower
Most experts agree that a new mortgage rate a full percentage point lower than your current one is worth refinancing to secure. So, for example, if your current mortgage rate is 8% or 7.50% and you can now lock in a rate at 7% or 6.50% (which is possible if you shop around for lenders), then it’s a sign that it’s safe and prudent to pursue a mortgage refinance now. Just make sure to account for closing costs and plan to live in the home long enough to recuperate those costs, otherwise, a mortgage refinance won’t make sense for you, regardless of how much lower a rate you can potentially obtain.
Explore your mortgage refinance options online today.
You can secure a mortgage rate half a percentage point lower
While a mortgage rate half a percentage point lower isn’t as optimal as a full percentage point, in some cases it still may be worth pursuing, especially if you think that the half-point drop is the best you can get for the foreseeable future. Not only will you save with your monthly mortgage payments, but you’ll also save a substantial amount in interest over the loan’s lifetime. For homebuyers who bought a home toward the end of 2023, for example, this scenario may already be available. So it makes sense to start calculating the potential savings now.
You want to get rid of your loan entirely
For many Americans, their mortgage payment is their largest one each month. But, in the face of inflation and high interest rates (not to mention higher borrowing costs), it may make sense to get rid of this loan entirely to refocus on other debts and expenses, instead. If you can refinance into a shorter loan term, then (like a 15-year mortgage) — and you can afford the condensed, higher payments — then it may be safe to pursue a refi, particularly if it allows you to reroute payments from your mortgage to other, high-interest debt. This circumstance is unique and is not broadly applicable, but can still be beneficial for select homeowners.
The bottom line
Homeowners looking for dramatically lower interest rates as motivation for refinancing may need to wait longer. But, for many, a mortgage rate that’s a full percentage point (or even half a percentage point) lower than what they currently have may be valuable enough to pursue now. Some others, meanwhile, may find it both safe and smart to refinance to pay the loan off sooner than expected. Each homeowner’s circumstances are different, however, so it’s important to carefully weigh your options before deciding which refinance path is best for you.
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If you’re tired of making monthly credit card payments only to see minimal reductions in your balances then you may be looking into debt relief options. Credit card debt forgiveness is one to consider.
Debt forgiveness companies aim to help you save money and get out of debt faster through negotiations. If those negotiations are successful, your credit card companies may forgive a percentage of your balances, which could provide the relief you’re looking for.
But, like all debt relief options, credit card debt forgiveness isn’t a one-size-fits-all solution. So, what are some signs that credit card debt forgiveness may not work for you? That’s what we will detail below.
Let a debt relief expert help you put your credit card debt behind you now.
4 signs credit card debt forgiveness may not work for you
While credit card debt forgiveness programs are a good fit for some borrowers, they aren’t perfect for everyone. Here are a few signs that credit card debt forgiveness may not work for you:
You always make your payments on time
Credit card debt forgiveness is typically designed for borrowers who can’t consistently make minimum payments. So, if you make your credit card payments on time, every time, that may be a sign that these programs aren’t a good fit for you.
There are a wide range of debt relief options. And, credit card debt forgiveness is a more extreme option that can come with more significant repercussions than others. So, if you can afford to make your monthly payments on time – even if it’s not always comfortable – other debt relief solutions may be a better fit.
Find alternatives to credit card debt settlement here.
You don’t have enough credit card debt
Most credit card debt forgiveness companies require minimum debt amounts to qualify for their services. For example, you’ll need at least $10,000 in credit card debt to qualify for the services Accredited Debt Relief provides and Freedom Debt Relief and National Debt Relief both impose $7,500 minimums. If you have under $7,500 in credit card debt, you may be hard-pressed to find a service provider to work with.
You already have a judgment
If you forego payments to your credit card companies for too long, they may sue you for the money you owe. And, if your credit card companies sell your debt to a debt collector, that collector may take you to court, too.
If you lose the case, your credit card companies, or the debt collectors they’ve sold your debt to, may win judgments against you. Those judgments can give them leverage, making them less likely to negotiate what you owe. While you may be able to settle a debt following a judgment against you, doing so may be more difficult. So, if you already have one or more judgments against you and can’t afford to pay the debt back, bankruptcy may be a better option.
You’re considering a large purchase
Credit card debt forgiveness may not be your best debt relief option if you want to make a large purchase, like a home or car. That’s because these solutions can harm your credit score, making it difficult to access new loans.
“Asking for payment relief or debt forgiveness should be given serious consideration prior to taking action,” explains Michael Broughton, founder and CEO of the credit-building app, ALTRO. “Once you request a change to terms or a lower payment, your credit could be impacted and the chances that you will be able to get loans for other, unrelated items can be severely diminished.”
The bottom line
Credit card debt forgiveness is a fitting solution for many people – especially if they can’t afford their minimum payments. But, it’s not the best fit for everyone. You may want to consider other options if you always make your payments on time, don’t have enough credit card debt, already have judgments against you or you’re in the market for a large purchase. Chat with an expert about your debt relief options now.
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