October 27, 2020
With interest rates lower than ever, refinancing your home could mean big savings on monthly payments. There are a few factors to consider before refinancing your home. But, if you’re looking to lower your interest rate or adjust your loan term, refinancing now could be the right choice.
Refinancing your mortgage means paying off your old mortgage and replacing it with a new one. It’s often easier to refinance than to get a loan for the first time. The best time to refinance is when you need more than what mortgage relief can give you. That doesn’t mean refinancing is for everyone. Research carefully and weigh all your options before committing to refinancing.
There are a variety of reasons to refinance. One of the many reasons is switching from a 30-year to 15-year repayment plan to save on interest. This could raise your monthly payment, but you’d be saving much more money in the long run. With a shorter repayment plan, interest would only accrue for half the length of time. Another reason to refinance is to switch from an adjustable-rate loan to a fixed-rate loan. Fixed-rate loans often have more steady repayment options. Some choose refinancing to get rid of private mortgage insurance. This is only possible when you’ve reached over 20 percent equity in your home, but it’s worth the savings.
Refinancing is meant to benefit homeowners. But sometimes sticking with your original loan is the best move. One thing to consider before refinancing is how long you plan on staying in the home. If you don’t plan on moving homes for the next 5-10 years, refinancing might be a good idea. Even if interest rates are lower than ever, it’s smarter to keep your old loan if you plan to move within the next 5 years. The refinancing fees could cost more than the savings of the new interest rate.
Figuring out when to refinance can be tricky. Studies have shown interest rates reached their lowest in the end of September. As the election gets closer rates are projected to start rising again. For those considering refinancing, it would be best to lock in the lower rates as soon as possible. Talk to our loan specialists to see if refinancing your loan is the best money move for you.