Is Now the Time to Refinance My Mortgage?
There are many factors that go in to determining if now is the right time to refinance your mortgage loan. And even though the current market rates are an important factor, the day-to-day movement of mortgage rates may not be the only thing to consider. What financial goals are you trying to accomplish (decrease total interest, monthly payments, etc.)? What are the costs to refinance? How long will it take to break even? How long do you plan to stay in the home? These, and others, are all good questions your local Gateway loan officer can help you with.
Let’s look at some of the reasons you might want to refinance:
- Lower Interest Rate: Getting a lower interest rate on your loan is one of the biggest reasons borrowers refinance. Can you get an interest rate a half of a percent or better than your current loan? That’s a good rule of thumb to consider when refinancing. With a lower rate, you’ll pay less interest over the course of the loan. And that means you can lower your monthly mortgage payment, decrease your time to payoff the loan, and sometimes both.
- Shorten Your Loan Term: Perhaps you have greater income than when you first took out your mortgage. You could use that income to pay larger mortgage payments, build equity in your home more quickly and pay off your mortgage much sooner.
- Increased Value: Has the housing market in your area improved and increased the value of your home? That means your equity has gone up too. You could get a new loan on better terms or convert that newfound equity into cash.
- Home Improvement: If you want to make repairs or renovations to your home without taking out a separate loan (maybe at a higher rate), refinancing your home loan may give you access to those needed funds for renovating.
- Money Needs: You might have a sudden need for funds to pay college or medical bills, pay off a high-interest credit card or respond to a sudden life change. A cash-out refinance loan might help you cover those expenses by converting your equity to cash.
There are 2 major types of refinancing options: Rate-and-term refinancing and cash-out refinancing. Both options can be a great financial move but one that should be considered closely with a trusted mortgage professional.
For more information, check out our Should I Refinance calculator in our Resources section or Find a Mortgage Center near you today.