You do not have to wait to see 20 percent equity before considering if you should refinance a home loan. You may be well poised to use the lower refinance rates to your advantage, provided you possess an excellent score on your credit card. To know how much equity you have on your property, deduct the amount you owe in loan from the amount your home is worth. Refinancing your mortgage may not be a really great idea at this particular point in time.
- Equity is the percentage of property’s value that isn’t owed on a loan.
- The loan-to-value ratio is the loan balance divided by the current value of the home.
- Lenders often want to see 20 percent equity or higher before they’ll consider refinancing a home loan.
“many homeowners are considering taking advantage of lower interest rates with a mortgage refinance”