When to consider refinancing a home loan
Have you been wondering how to free up some extra cash every month while still meeting all of your responsibilities? If you are a homeowner you may want to consider refinancing your home loan. One of the best and most popular reasons to refinance your mortgage is to lower the existing interest rate you are paying on your loan every month. Having to pay less in interest each month means you can still put the same amount to principal while paying less to interest, therefore keeping more of your hard-earned money in your pocket. When you refinance, you are basically paying off an existing loan with a new one, ideally at a lower rate.
Here are a few things to help you determine when you should consider refinancing:
- If a lower interest rate is available, it’s almost a no brainer. If you can refinance your home loan and reduce the interest rate by one to two percent, most lenders will say “go for it”. When you reduce the interest rate on your loan you can not only save money and reduce your monthly payment amount, you also increase the pace at which equity in your home builds.
- You might be able to convert your adjustable rate mortgage to a fixed rate mortgage. An adjustable rate mortgage may begin by offering you a lower interest rate, but “adjustable” means that rate can be increased periodically until it may be higher than a fixed rate. If that happens, it could be wise to convert to a fixed rate mortgage and eliminate the possibility of ever increasing interest rates.
- Should you convert from a fixed rate to an adjustable rate? On the flip side, if the current economic environment is one of steadily declining interest rates, it may be a smart move to convert to an adjustable rate mortgage and take advantage of lower monthly mortgage payments, especially if you don’t plan on staying in your current home for a long time.
- You could shorten the term of your loan. Sometimes, you can refinance your loan from a 30 year term to a 20 year or even 15 year term for almost the same monthly payment when interest rates fall significantly. This can mean getting out from under mortgage debt in half the time, which is an attractive incentive for many homeowners considering refinancing their home loan.
Give us a call today at (719) 638-0531, or contact us via our company email at email@example.com. We are happy to answer all your questions and help simplify the intricate mortgage loan refinancing process for you. Contact us right now and let us help you make your home loan work for you, possibly lowering your monthly mortgage payment and freeing up some cash.