Many people want to know if a mortgage refinance is right for them, especially with the low-interest rates out there. You may be questioning the timing of a mortgage refi. If we refinance today, will rates go even lower? Those who wait may be missing the boat on some big savings. Is mortgage refi right for you? Well, it depends on why you want to refinance. There are many excellent reasons to refinance your house. If any of them pertain to you, then you may want to seriously consider refinancing.
9 Reasons to Refinance Your Mortgage
- Refinance your mortgage to lower your interest rate. This is the biggie folks, and the one that can save you some serious moola. It’s also the most common reason that homeowners refinance their mortgage. Refinancing to a lower interest rate can save you on interest paid over the life of your loan. The trick here is keeping your term the same with a reduced interest rate.
- Shorten your mortgage term. This is another proactive way to save on interest over the life of the loan. It can also help you to build equity faster. If you are able to capitalize on a lower interest rate as well as shorter term, you’ve really hit the savings jackpot!
- Changing your rate from adjustable to fixed. If you still have a while to pay off your mortgage, refinancing to lock into a fixed rate mortgage can possibly save you in the long run. You may also be faced with a balloon payment and refinancing may help you avoid that too.
- To drop PMI once and for all. If you were required to carry private mortgage insurance (PMI) because of your LTV of your original mortgage, a refi may be able to fix that. If you’ve paid down your mortgage enough, your loan to value may now be at a level to rid yourself of that pesky and expensive PMI. If you can lock into a lower interest rate too. Well, that’s a win, win.
- Refinance your home loan to take some cash out. If you have equity built up in your home and are in need of some extra funds, a mortgage refi may be a solution. Especially if you can refi at a lower interest rate. A cash-out refi can help with any number of needs, from college tuition bills to home improvements or large purchases. It can also help you consolidate and pay down higher interest debt.
- Your credit score and finances have improved significantly. Perhaps you got saddled with a higher than average mortgage interest rate due to poor credit history. If you’ve worked to improve that, you may now qualify for a lower rate. Speak to your local credit union loan representative to learn more.
- Changing from an FHA to a conventional mortgage. Again, maybe your situation changed, and you now want a better mortgage option. You may be able to do away with some mandatory insurance and enjoy an even lower rate. Be sure to check out Choice One Community Credit Union’s low mortgage rates for comparison.
- Refinance to increase your mortgage term and lower your payments. As we’ve mentioned, circumstances change all the time. Maybe you’ve found yourself unable to afford a high mortgage payment. Refinancing to lengthen your term may help you to better manage your monthly payment. A word of caution, when you increase the term you will be paying more in interest over the life of the loan.
- Refi to buy someone out. Life happens and sometimes so does divorce. In any event, there may be a need to buy someone out of their portion of the house. A refinance can help get you the funds you need to do so.
Refinancing your mortgage can be a great financial move if done for the right reasons. We hope the points we touched on above helped you decide if it’s right for you. There are fees involved with refinancing your mortgage, so you need to be aware of that upfront. The first step in refinancing is to compare rates and fees and speak to a mortgage lender about your mortgage refi options. Refinancing with a local credit union, such as Choice One, can give you access to competitive mortgage rates, flexible terms, lower closing costs, and fewer fees. Learn more about Choice One Community Credit Union mortgage loans.