BlogRefinance May 25 2021

When is the Right Time to Refinance Your Mortgage?

Mortgage rates have been at historic lows for years, but with the post-pandemic economic uncertainty and possible inflation looming, there's been a scramble for homeowners considering refinancing.

A super-low rate is definitely tempting—after all, lowering your rate can shave a nice chunk of money off your monthly payment—but refinancing does have a cost; fees can range from 2% to 5% of the loan amount, so in order to know if you can recoup your expenses, there are a few considerations you need to make.

Here's how to know when the time is right for refinancing.

When you gain enough equity to get rid of PMI.

Private mortgage insurance, or PMI, is a cost homebuyers typically carry when they purchase a home with less than 20% down. To not pay PMI, you must pay down enough of your mortgage so that you owe less than 80% of what the home is worth.

A refi can help you get rid of PMI if your home has appreciated considerably and prices are on the upswing in your neighborhood because you'll be recalculating what you owe based on your home's new, higher value. Say for example you put down 10% to buy your home, you have PMI, and your home has appreciated 15%. You would now have enough equity to qualify for release from PMI.

Be aware that this strategy may not work for recently purchased homes, as many home loans have a seasoning requirement where you must wait at least two years before you refinance.

When you want to change the loan you have.

Homeowners with adjustable-rate mortgages (ARMs) should definitely keep an eye out for refi opportunities. ARMs offer attractively low fixed rates for usually 5 or 7 years, but then reset to the current mortgage rates once that initial rate expires, so it makes sense to plan for a refi sooner than later, especially if rates seem to be rising. When you've identified an attractive rate, refinancing can allow you to lock in at a 20- or 30-year fixed-rate mortgage.

Homeowners who want to save on interest rates and pay off their loans faster can benefit from refinancing. Simply going from a 30- to a 20-year mortgage can save you tens of thousands of dollars in interest payments over the life of the loan.

When your financial health has majorly improved.

If your financial picture has improved since you purchased your home—say you've paid off a major debt, gotten a higher-earning job, and improved your credit—then you would likely qualify for a more attractive interest rate that might make a refi worthwhile.

When you know you are going to be in your home for several years.

Because of that 2% to 5% closing fee associated with a refinance, your new loan will take time, usually a few years, to recoup that expense and break even. If your plans are up in the air or you may be facing a relocation, refinancing might not be the best cost-saving option.

Mortgage rates are changing daily, and a refinance could be the ticket to more financial ease, less stress, or a shorter loan term. Chat with a Lennar Mortgage consultant and find out what your future payments could be like.

Search Results for query

February 22 2022

NAMMBA Connect Tour 2022 - Sponsored by Lennar Mortgage

Lennar Mortgage is proud to sponsor NAMMBA Connect Tour 2022.

Read More

January 05 2022

How to Prep Your Home When Heading on Winter Vacation

For peace of mind when you're gone on a winter trip, here a few simple tricks and tips you can use to get your home vacation-ready.

Read More

December 14 2021

FHA Loan Limits Increase for 2022

Check out how the FHA is making things easier for those hoping to buy a home in 2022.

Read More

November 10 2021

Pet-Friendly Remodeling Ideas

Here are a few ideas for making some pet-friendly changes to our homes to make them more fun, friendly and comfortable for our furry friends.

Read More

November 03 2021

Fall Garden Cleanup Checklist

Find out which chores to skip, which are must-dos, and how to keep your garden looking beautiful in the fall.

Read More

October 27 2021

Should You Buy a Home with Cash?

Paying upfront instead of obtaining financing is often seen as a way of getting a leg up on other potential buyers. But is it always the best idea? And why is it so common

Read More

October 19 2021

5 Ways to Make Your Offer Stand Out in a Tight Housing Market

With huge buyer demand and a shrinking inventory, this market means you'll need to be strategic, creative, and prepared in order to buy your dream house.

Read More

October 12 2021

Should I Buy a Home with an HOA?

In the excitement of buying a new home, it can be easy to overlook the presence of a Homeowners' Association, or HOA. But an HOA can have a lot of influence over your purchase choice, including your monthly payment, the money you need to set aside for...

Read More

October 04 2021

14 Brilliant Ideas for Decorating Your Porch This Fall

Simple and inexpensive solutions for a cozy, colorful porch that says "welcome."

Read More


Mortgage Calculators

Crunch the Numbers With Our Helpful Mortgage Calculators

Payment Calculator

payment calculator


Affordability Calculator

affordability calculator


Refinance Calculator

refinance calculator


The Modern Digital Mortgage with a Personal Touch

Paperless. Effortless. Awesomeness TM

Simplify the home financing process with our Digital Mortgage. We'll be here to help navigate you through the entire process.

Get Pre-qualifiedWhat is a Digital Mortgage?