Refinancing your mortgage is something most homeowners usually consider at least once throughout the lifetime of their home loan. It allows you to pay off your current loan by applying for a new one that may have better financial advantages. Here are five common reasons to refinance according to my preferred lender, Jeff Baxter with Guild Mortgage. If you need a great lender, Jeff and Guild are awesome!
- A lower interest rate. The number one reason homeowners decide to refinance is to secure a lower interest rate on their mortgage. Not only does this save you money in the long run and decrease your monthly payment, but you can start building equity in your home sooner.
- Has your credit score improved? Even if interest rates have not dropped in the market, if you’ve improved your credit score over the last few years, you may be able to reduce your mortgage rate.
- Shortening the loan’s term. If interest rates are decreasing, there is a chance you may be able to get a shorter loan term with little to no change in your monthly payment, allowing you to pay off your loan sooner.
- Switching from an adjustable rate to a fixed rate. If you chose an adjustable-rate mortgage with great introductory rates when you initially financed your home, that rate may increase significantly over the years. By switching to a fixed rate while interest rates are low, you can protect yourself from future increases.
- Need some cash? If there is a big purchase or payment on the horizon, such as funding a wedding or going back to school, your best option may be to use the equity you’ve built in your home to borrow money at a lower cost. Rates are pretty good right now so it might be a great time to be sure you have the best one you can get! See you next time for a great thought on how to be sure your pets are included in your evacuation plan in the case of an emergency!