Refinancing Your Mortgage

How do you know WHEN to refinance?

There are times when it is certainly more beneficial to refinance. By asking yourself a few simple questions you may be able to find peace of mind on whether or not to refinance your mortgage. Two questions immediately come to mind: What are the current rates doing and how long do I plan on staying in my home?

Refinance From Adjustable to Fixed Rate

One must always consider what the rates are doing and if they are rising or falling. If you have an adjustable rate mortgage (ARM), it may adjust to a rate that is higher than a fixed mortgage. Subsequently, it may be a good time to refinance towards a fixed-rate loan. If you plan on staying in your home for only a few more years it may be in your best interest not to refinance out of your adjustable rate though. But, if you plan on staying in your home longer than 6 years it might be wise to refinance to a fixed rate loan.

Refinance From A Fixed To An Adjustable Rate

The average home owner moves within 9 years and based on that information it does not make sense for people to pay a higher rate for a 30 year fixed mortgage when they won’t even be in their home that long. If this describes you then take action today and refinance to an adjustable rate instead. This will help lower your rate and your monthly payment as well.

Get Cash From Your Home

Everyone knows the importance of having immediate cash flow. By using the equity in your home you can gain access to a home equity loan or even a cash-out refinance. This come in handy when you feel you may need a home improvement, or even to pay off a high interest credit card that has been weighing you down. It is important to know you have options when it feels like cash is running out.

How To Lower Your Monthly Mortgage Payment

Most people do not realize that a fraction of a percentage point can dramatically raise or lower your monthly mortgage. By not refinancing you may already be losing thousands of dollars per year. Changing the term on your mortgage can also be a serious money saver. If you currently have a 20 year mortgage you can lengthen it to 30 years and your payment will be considerably lower. But, if you have a 30 year term and your number one goal is life savings, you may want to reduce it to a 15 year mortgage. Your monthly payment may be higher but you will be paying much less in interest and in turn saving you money in the long run.

Consolidating High Interest Credit Card Debt

Interest rates can change everything. Credit cards possess much higher interest rates than mortgages and are not tax deductible like mortgages are; it is for this reason that credit cards are often labeled as “bad debts”. Using the equity in your home to pay of high interest credit cards or even larger purchase items can be a smart move and save you money in the long run.

Refinance Breakdown

Contrary to belief, mortgage refinancing has been growing in popularity despite our current economic turmoil. The benefits of refinancing are overwhelming and thus persuade several homeowners into doing so. Switching to a fixed rate to lower your monthly payments, taking advantage of lower rates on high cost high interest mortgages, and getting cash out of your investment are all among the most popular ways to refinance your mortgage.