refinancing your mortgage
There are many reasons why refinancing your mortgage makes sense with your financial goals. Refinancing means paying off your existing mortgage with a new one, potentially with a lower rate or monthly payment. However, refinancing also typically involves costs such as appraisal and loan origination fees, which can add up to as much as 3% to 6% of the amount you’re refinancing. Understanding the refinancing basics will help you determine if it's right for you.
When refinancing your mortgage could be a smart option:
- YOUR CREDIT HAS IMPROVED. If you received your mortgage at a time when you had average credit or a short credit history and your score has since improved, you may qualify for a lower rate now.
- INTEREST RATES HAVE DROPPED. If rates have gone down, a lower rate could save you thousands of dollars in interest costs.
- CONSOLIDATE OTHER LOANS. A cash out mortgage refinance can be handy if you’d like to consolidate any high-interest debts, such as student loans, credit card balances, or medical expenses, or if you simply want cash out.
- SWITCH FROM AN ADJUSTABLE TO A FIXED-RATE LOAN. If you have an adjustable-rate mortgage, or ARM, you run the risk of the payments increasing. Refinancing may enable you to switch to a fixed-rate loan and take the uncertainty out of your mortgage payment plan, which is especially beneficial if you think rates will increase over time.
- YOU WANT TO CHANGE YOUR MONTHLY PAYMENT. You may be able to extend your mortgage term to reduce your monthly payment if your current one isn’t affordable anymore. On the flip side, you may also shorten the term, such as getting a 15-year to replace your 30-year term.
If you are considering a mortgage refinance and want to explore your options, call our mortgage experts at (636) 720-2495.