Should I consider refinancing my home?
As homeowners, we’re always on the lookout for ways to save money each month on household costs, from everyday expenses to monthly costs like mortgage payments. One of the ways we might save on monthly mortgage payments is to refinance.
A conventional refinance is a strategy of paying off your existing home loan and replacing it with a new one with more favorable terms. There are several factors to take into consideration before deciding to refinance and as always, your individual situation should be the defining factor.
Lowering your monthly payment
Traditionally, homeowners would refinance their mortgage when interest rates fall below their current rate. Doing so can save you money in interest and even help build equity in your home faster. If you want to take advantage of a lower rate, talk to your lender to discuss.
Switching to a fixed-rate mortgage
If you currently have an adjustable-rate mortgage and want to refinance to a fixed-rate mortgage with a favorable interest rate, refinancing could save you money and give you predictable mortgage payments.
Tap into equity
Before refinancing, it’s important to have lived in your home long enough to have built up enough home equity. You can refinance to put this cash back in your pocket to pay for other expenses, such as home repairs that build more equity.
Discuss your options with your lender
Refinancing can be a great financial decision when used carefully. It should make sense and benefit you in the long run. You don’t want to use that hard-earned home equity for impulse purchases. Likewise, a refinance still involves the associated fees of a mortgage, so make sure the costs don’t outweigh the benefits.
If you’re considering refinancing your mortgage loan, talk to your lender first. They will help you understand associated fees like closing costs and current mortgage rates. At Smartmortgage.com, our lenders will walk you through the process and recommend the best course of action.