As interest rates continue to drop throughout the state, many homeowners in Rhode Island are rushing to refinance. If you are thinking about doing the same, the decision shouldn't be taken lightly. A Rhode Island refinance loan is a big commitment, just like your first loan was. To determine whether or not refinancing is right for you, you'll need to ask yourself the following questions:
Will I get a lower interest rate?
The interest rate you pay is important. Currently, rates on Rhode Island refinance loans average 5.79 percent for 30-year loans and 5.53 percent for 15-year loans. If this average is quite a bit lower than your current rate, refinancing could save you a bundle.
Can I afford the closing costs?
The unfortunate part about refinancing is that you will be required to pay almost all of the same closing costs that you paid with your original mortgage loan. Closing costs on Rhode Island refinance loans average $2961. If you don't have the money saved, you'll be forced to find a no closing cost refinance loan or roll the costs into your loan. Either way, you'll pay for it.
Is refinancing the best way to borrow from equity?
If the main reason you are getting a Rhode Island refinance loan involves borrowing from your equity, you may want to consider other loan options as well. Home equity loans and home equity lines of credit give you the opportunity to borrow from your equity without having to refinance your mortgage loan. Though rates can be slightly higher on these loans, there tends to be a lot less hassle.
Do I have time to improve my credit rating?
If your credit is on the poor side, you may want to take a little time to work on it before applying for your Rhode Island refinance loan. The better your credit is, the less your refinance loan will cost you.
Visit Rhode Island Lending Center to see our Top 3 Refinance Lenders Servicing Rhode Island , whether you are looking for home purchase, refinance or a home equity loan.