5 Reasons To Refinance Your Mortgage Right Now
With mortgage rates increasing it makes you wonder, when should you refinance your mortgage? We'll answer this question as we look at five good reasons to consider a mortgage refinance.
You may find that refinancing could save tens of thousands of dollars in interest and years of mortgage debt repayment. Though it does take some effort to get the process started, it could be easily worth it depending on your situation.
Here are some reasons that you may want to consider refinancing your home loan.
1. Refinance to cash out home equity
It may make sense to cash out some of your home equity in order to remodel your home, buy an investment property or start a business. It mostly depends on what you are trying to achieve and if you are someone who can manage your debts responsibly. Colorado has seen a record in home appreciation increases since 2015.
2. Refinance to shorten the term of your loan
If you have a 30-year mortgage, now may be a great time to consider refinancing to a shorter duration in order to reduce the amount of interest you pay on your loan. This could save you of tens of thousands in interest.
Start by entering your information into our mortgage calculator to see what your new payment might be. If your new estimated payment is feasible, consider contacting a mortgage professional like Tim Weber.
3. Refinance to lower your payment
Interest rates are near historic lows. You may have a loan that can be refinanced at a lower rate could mean drastically reducing your payment and saving tens of thousands of dollars in interest. Also, you may have enough equity in your home to remove your mortgage insurance payment which will save you up to a couple hundred dollars each month.
Refinancing your mortgage at a lower rate or to remove your mortgage insurance is a no-brainer if you’re looking to save money. It can potentially shave thousands of dollars off your loan. Instead of throwing your hard-earned cash away on interest, you could use the money you’re saving to beef up your emergency fund, pad your retirement nest egg or pay for home improvements to increase your equity value.
4. Refinance from an adjustable-rate mortgage to a fixed-rate loan
Converting an Adjustable Rate Mortgage to a fixed-rate loan makes sense if you’re looking for more stability in your finances. Locking in a fixed rate means your payments will stay the same, unless you decide to refinance later on. You might see more savings in the short-term with an adjustable rate loan but switching to a fixed-rate will benefit your bottom line in the long run.
5. Refinance because you have a higher credit score
You may be able to qualify for a lower rate if your credit score has improved. According to myFICO, current mortgage rates can vary by as much as 1.50% based on your credit score. On a $300,000 mortgage, a 1.50% higher mortgage rate due to a mediocre credit score will add more than $250 a month to your mortgage payment.
Refinancing Can Help You Reach Your Financial Goals
Before refinancing, consider what your goals really are. Do you want to lower your monthly mortgage payment? Do you want to pay off your mortgage and get out of debt faster? Contact us today and we’ll help you answer those questions.