Life seems to come down to monthly payments. If you are struggling to meet the minimum installment on your mortgage, it may be time to consider refinancing. Refinancing offers many benefits, including:
The most important thing you need to consider is your future. For example, you wouldn't want to refinance to a low-interest three-year adjustable-rate mortgage unless you plan to sell your home in the near future or refinance again.
Refinancing offers the possibility of saving money each month, as you may be able to lock in a lower interest rate than what you currently have. If you can make the same payments as before but are able to get a lower interest rate, you can pay off your home in a shorter amount of time. Just be sure you’re paying close attention to the terms of your refinance.
The first step in getting started with refinancing is to compare your mortgage to current refinancing rates. If current rates are lower, now is a good time to further explore!
For all those who are looking to substantially decrease monthly mortgage payments, refinancing may be the way to go, as you can extend your term. This course of action does mean that it will take longer to pay off your home and that you’ll likely pay more than what you would have with a shorter term. That’s why it is always important to explore all of your refinancing options based on your current financial situation.
Refinancing is very popular, due largely to the fact that interest rates have been historically low. With several refinancing options to choose from, it’s easy to set yourself up for success.
For example, you can choose a fixed-rate mortgage for an interest rate that will stay the same for the duration of the loan, which is typically 15 or 30 years. For homeowners who don’t plan on staying in their home for the long run, they have the option of switching to an adjustable-rate mortgage (ARM) in which the interest rate stays the same for a set period, which is typically three or five years.
Other than switching to a fixed or adjustable-rate mortgage, you have the option of going with a cash-out refinance. This option is particularly beneficial for those who are looking to tackle some major home improvements.
If you have built up equity in your home, you might want to consider this course of action. It's great for those who want to improve upon their current house rather than move into a new one. By utilizing a cash-out refinance, you can get access to the funds that are needed to complete the home improvement project. Many mortgage companies even offer special incentives to those who are planning on using the money to improve their house. In this type of situation, you would be building your equity even as you take cash out!
Depending on your current situation, it may be wise to review your interest-only refinancing options. This type of refinancing is exactly what it sounds like; you are only required to make payments on the interest each month. That means significantly smaller payments than what you’re used to.
It’s important to note that there will come a time when you’ll have to make payments on both the interest and the principal. For this reason, an interest-only mortgage can be risky, so ensure you’re carefully weighing the pros and cons.