Watch Your Home's Equity if You Plan to Refinance
Low mortgage rates might look tantalizing, but if you don’t have a good handle on your financial situation, you could find that you aren’t getting as good a deal as you thought. Today’s lenders want to know more about your finances than ever before, and with housing prices still low, getting burned on a refinance can happen.
Avoiding a bad refinance isn’t hard, it just takes some diligence. This means having all the information you need to make the right choices. The problem is that your financial information is always changing. From your debt to your savings to the price of your home, everything is on the move. If you don’t stay on top of your current financial situation, you may find that refinancing isn’t as easy as choosing an interest rate.
Why Watching Home Equity is Important
Well, the short answer is because, like most things financial, it’s always changing. The longer answer is because it is likely to go down in the coming months. If you look at current rental and cost of living statistics, you will see that housing prices are still above most American’s pay grades. In order for the number of homes that are currently on the market to sell, many of them will have to be sold for less than they are worth. This means the overall market values for houses in these areas will go down.
If you are thinking about refinancing it’s a good idea to know not only your homes appraised value, but also the values of similar homes sold in your area. Acting before prices reach their bottom may mean more money in your pocket and less in interest rates.