Have you been debating if the time is right to refinance your house? While everyone's situation is different, here are some reasons that it is a good time to do it.
You Want To Take Advantage Of Lower Interest Rates
Chances are that the reason you want to refinance is that the interest rates have dropped significantly compared to what they were when you originally got your mortgage. You can only get that lower interest rate if you essentially start over with a new loan, which is where a home refinance will come into play.
You Want To Lower Your Monthly Payment
One of the main reasons that people refinance is because they want to reduce how much they are paying per month towards their mortgage. Refinancing gives you the opportunity to do so since your new loan amount will be based on those lower interest rates that are currently being offered. When you add in all the equity you build up in your home over the years so far, you'll be sure to have a lower payment.
You Want To Shorten The Loan Period
When you originally got your mortgage, you may have gone with a 30-year mortgage to be safe and ensure you could make the monthly payments. Now that you're further in your career and more financially secure, you may be able to afford those higher payments that come with a 15-year mortgage. Since a 15-year mortgage has a lower interest rate than a 30-year mortgage, you'll definitely see some savings by converting to a mortgage with a shorter term.
You Want To Stay In Your Home For A While
A mortgage refinance isn't something that you do when you are getting ready to move. This is due to how a refinance costs just as much as getting a new mortgage for the first time. You end up playing all of those closing costs associated with the loan, and you start over on the amortization schedule where you are paying more interest than the principal during the start of the mortgage. This means it only makes sense if you plan on staying in the home for a while to break even on those costs associated with a home refinance.
Think you're ready to refinance your home? Reach out to a mortgage lender in your area that can help guide you through the process and tell you all of the benefits.