4 Signs It’s Time to Refinance Your Mortgage
With rates near historic lows, now is a good time to talk to a mortgage professional to discuss your home ownership goals. In fact, refinancing is booming right now with requests for refinances making up 64 percent of total mortgage applications the first full week of July, according to the Mortgage Banker’s Association. Here are four signs it might be time for you to consider refinancing your mortgage!
Get a Better Interest Rate
Interest rates play a huge role in how much money you pay for your mortgage each month, as well as over the life of the loan. If your mortgage was originated when rates were higher, you might be able to lower your rate and save thousands of dollars over the life of your loan. Current mortgage rates are near historic lows, so now is a good time to evaluate the potential savings from refinancing your mortgage.
If you suddenly find yourself needing to pay less on your mortgage, either due to a change in income or added expenses, refinancing can be a good option to help put some money back in your pocket. Depending on when you first took out your mortgage, you may be able to get a lower interest rate which will save you significantly. However, if the change in interest rate is not enough, you could also look into extending the terms of your loan. Since the amount that you owe on your home is lower now than it was when you first bought it, you will be borrowing less money when you refinance. Spread out over a new loan term, typically 15 or 30 years, your monthly payment will be smaller.
Your Adjustable-Rate Mortgage is About to Adjust
An adjustable-rate mortgage is a type of mortgage in which the interest rate changes. These loans have an initial fixed-rate period of three, five or seven years. When the fixed-rate period ends, the rate changes every year to reflect market changes. This means the mortgage rate can increase or decrease, which causes monthly payments to also rise or fall. An adjustable-rate mortgage can be a good short-term option, but when the adjustment period kicks in, your rate could quickly exceed the current fixed rates. Refinancing, however, will allow you to switch over to a fixed-rate loan to make your monthly payments stable and predictable.
Pay for a Big Expense
Home equity is the difference between your home’s value and what you still owe on your mortgage. A cash-out refinance allows you to borrow cash from your equity. You will end up owing more on your house and you’ll have less equity, but this is a good option if you find yourself needing cash for debt consolidation, home improvements, college expenses or any other large expense.
Does refinancing sound like a viable option for you? Contact us today for a FREE Consultation!
*Refinancing may result in increased total life of loan finance charges over your current obligation.
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