Whether it’s better to refinance or sell your house will depend on a range of factors. You must consider the current market where your house is, the value of your home, how much you owe on it, and what your goals are for the house. Here’s an overview of some of the refinancing pros and cons.
When you refinance a home, you need to apply for the refinance loan similarly to how you would apply for a mortgage. The lender will look at your credit, but also the value you have in your home and the condition. As long as the house is in reasonably good condition, the lender will be more open to refinancing.
When you refinance, the fees associated with the loan are added into the new mortgage, so you may not have upfront costs, but the total loan will be higher. This is important to understand because it will decrease the equity you have in the home. While this may sound like a disadvantage to refinancing, it depends on what your goals are with the house.
For example, if your goal is to lower your monthly payments, you can do that when refinancing. Although the overall loan will be higher, when you take the amount left on your mortgage and roll it back into a 30-year loan, the monthly payments will be lowered.
If you owe more than it’s worth or close to what the house is valued at, you will have a harder time refinancing because you won’t have the equity to absorb the extra cost of the loan. This will also prevent you from being able to lower your payments.
When you refinance, you’re more likely to get a favorable interest rate. You will also have more flexibility in how to structure the loan. Depending on how much you owe for the house, you may be able to get any other debt you have rolled into the loan to reduce your monthly expenses.
Refinancing is the best option when you want to stay in your home but restructure your finances or get work done on the house you cannot otherwise afford. It allows you to get a new loan that will pay off the original mortgage while also taking equity out of the house and lengthening the remainder of the loan, so your monthly payments may be lower and you may be able to get money to pay off debt.
If you aren’t committed to the house you’re living in and want to lower your overall monthly expenses; you can sell the house and find something else. The downside of selling is that you have to wait for the house to sell, hoping you get an offer in the price range you are looking to sell. A wait is involved and a lot of factors to work with for sale to go through.
The difficulty of selling your home will depend on its condition and the area you live in. However, you can find companies such as Sell Quick California that you can contact to see if your house is in line with what they’re looking for. You may see their signs that say something like We Buy Homes in Solano County. Going through a company like this can allow you to skip much of the process involved in selling a home.
In the meantime, look for a new place to live that’s within your budget and where you want to live. While this can be stressful, it can also be exciting. You can find something that will entail lower monthly payments or similar monthly payments with more space and the features you want.