What They Have in Common
Both refinancing and selling present an opportunity to get a new loan with more favorable terms. You can lower your interest rate and monthly payment, change the length of the loan, or switch from a fixed- to variable-rate mortgage. In both cases, your property will need an appraisal, and you’ll need to be in good financial health—keep an eye on your credit score, DTI, etc.
When Selling Your Home is Better
Selling may be a better option than refinancing if:
- Your Property Value Has Increased
If you’ve been paying your mortgage steadily for years, increasing your equity, and the property value has gone up significantly, selling could net you a major cash boost. - You’re Willing to Move
Not all decisions are financially motivated. If you like your home and neighborhood and you expect to stay for at least five years, refinancing is the better choice. However, if you’re ready for a new environment (or this is a good time to downsize), selling may afford you more opportunities. - You Have More Time
Refinancing certainly takes time and effort, but selling comes with additional responsibilities. For example, you’ll have to find an agent, search for a new house, and put more money and energy into repairing issues with your property. If now isn’t a great time for extra commitments, refinancing should be a simpler way to get a new loan.
Still not sure whether selling or refinancing is the right avenue for you? Ask your loan officer—they’ll review your current situation with you in detail and guide you toward the best way to go.
Related Articles
3 Moves to Make After Closing Your Refi Loan
Now that you’ve finished your refinancing process, you’re probably ready to stop thinking about home loans and get back to your daily routine. That’ll come soon—first, there are three critical steps you should take to start your post-refinancing phase on the right foot.
What is the best time to refinance your mortgage?
Applying for a mortgage refinance is beneficial to many homeowners that are seeking to lower their monthly mortgage payments or reduce the term on their loan. Regardless if this is your first refinance or you’re a seasoned pro, meeting with a knowledgeable loan originator can help you determine if a refinance loan is right for your current financial situation.
Should You Refinance Your Mortgage?
Opting to refinance your mortgage means you can apply for a new mortgage with better terms than your existing mortgage. A refinance will typically require less paperwork and can close faster than a purchase transaction.
