While considering the decision to refinance your home, it is important to first determine whether the amount you will save on interest balances the amount of fees payable during refinancing. I can provide you with the information you need to decide if refinancing will help save you money in the long term mortgage of your home.

Benefits of Refinancing

Imagine a scenario where you can have access to extra cash, while simultaneously lowering your monthly mortgage payment. This dream can become a reality through mortgage refinancing.

A house is the largest asset you may ever own. Likewise, your mortgage payment may be the largest expense you'll have in your monthly budget. Wouldn't it be great to use this asset to reduce your monthly payment and put extra cash in your pocket? When you refinance your mortgage, you can take advantage of the equity in your home and enable this to take place.

Lower Refinance Rate, Lower Payments

When you purchased your home, the financial environment dictated interest rates. While certain factors, like your credit rating and the amount of the down payment that you were able to afford, influenced your interest rate, the single most important factor was the prevailing rates at the time of your purchase. However, interest rates fluctuate. When the Federal Reserve enters a rate-cutting period, the prevailing rates may become significantly lower than when you originally purchased your home.

By refinancing your mortgage when interest rates are lower, you can exchange a higher interest rate for a lower one, which, in turn, will lower your monthly payment and help you save money. Top

Shorten the Length of Your Mortgage

Another advantage of home refinancing is that you can shorten the term of your mortgage. Let's say, for example, that you originally had a 30-year mortgage and have been paying it for eight years. With a mortgage refinance, you can switch to a shorter term of 10, 15 or 20 years. This can save you thousands of dollars of interest. Also, if the refinance rate is lower, but you maintain the same monthly payment, you can build up equity in your home more quickly, because more of your payment will go towards the principal amount of your mortgage, rather than the interest. Top

Exchange an Adjustable Rate for a Fixed Refinance Rate

When interest rates are low, Adjustable Rate Mortgages (ARMs) are popular within the housing market. However, as interest rates increase, it might be time to reconsider if the adjustable rate is still the best option, compared to the current rates available.

It's also possible that you opted for an ARM because your financial future was less secure, or you weren't sure how long you would live in your home. If now you’re more financially stable and know that you'll be staying in your home for several years, it may be beneficial to swap your fluctuating adjustable rate for a fixed one. You'll have more security knowing that your monthly payment will remain steady, regardless of the current market environment.

You should consider refinancing at least 30 days before the interest rate begins to adjust. This will help ensure you keep the same monthly mortgage payments, or even help lower your interest rate. Top

Gain Access to Your Money with a Cash-Out Refinance

One way to gain access to more money is to tap into the equity you've built in your home and do a Cash-Out Refinance. In this scenario, you can refinance for an amount higher than your current principal balance and take the extra funds as cash. This can provide money for remodeling your home, paying off bills with high interest, or paying your children’s college tuition. Top

Bye, Bye PMI

If you were unable to make a down payment of at least 20 percent when you originally purchased your home, you may have been required to purchase Private Mortgage Insurance (PMI). If your house has appreciated since then, and you've steadily paid down your mortgage, your equity may now be more than 20 percent. If you refinance, you will no longer need PMI, and may be able to save thousands of dollars.

Your house may be the largest investment you ever make, and it can continue to build equity for you. However, as your financial situation changes, you may need to reevaluate your investment options. Contact me to learn how refinancing may enable you to save money and get you further along on reaching your financial goals. Top

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