Thought About Refinancing? Maybe You Should.
By Sonny Upchurch November 30, 2022
With concerns mounting about our economy, many homeowners are taking a step back and reevaluating their finances. Refinancing a mortgage is something that every homeowner considers as they work on improving their finances.
But why should they get one? And when is the right time?
Below are a few reasons why you might want to get your house refinanced
To Get a Lower Interest Rate
The most obvious reason is to lower your interest rate. This is known as a Rate-and-term refinance loan.
By refinancing with a lower interest rate, you could save tens of thousands of dollars.
To see the current refinance rates, check out Bankrate.
You Want to Pay Off Your Home Faster
When you refinance, you can choose to shorten your loan term from 30 to 15 or 10, depending on your payoff goals.
Keep in mind that the longer the payoff, the lower the monthly payments. The shorter the payoff, the higher the monthly payments.
Look at your finances and monthly income to determine which would work better for you and your family.
You Want to Change Mortgage Types
While there are a few different types of mortgages, the two main mortgages are fixed-rate and adjustable rate.
A fixed-rate mortgage has the disadvantage that you cannot change your interest rate, it’s forever locked into the loan.
An adjustable rate mortgage (ARM) has a fluctuating interest rate, which can cause your payments to go up or down.
You Want to Get Equity
If you are interested in cashing out for equity, you should look into refinancing. There are quite a few requirements for this option, so be sure to do your research.
You Want to Consolidate Your High-interest Debt
This is a great idea for people with a lot of credit card, student loan, or medical debt. Be sure to have enough equity before you explore this route in order to pay off loans at cash-out.
You Want to Get Rid of PMI (private mortgage insurance)
Private mortgage insurance is what many people are required to add on to conventional loans. This insurance only protects the lender in case you stop making payments.
If you refinance for 20 percent or less, a PMI may still be required.
Now that you know why you want to refinance, here are some questions to ask yourself:
When Should I Refinance?
The Interest Rates are Low.
Because housing market conditions are changing in 2022, interest rates are on the rise. A smarter idea would be to get an adjustable rate mortgage. That way if you end up with a rate higher than you’d like, you can always change it later on.
Your credit is great
If you’re able to get an adjustable rate mortgage and your credit is excellent, you might want to look into refinancing if it fits your needs.
Final Thoughts
Refinancing your home is a big decision and shouldn’t be taken lightly. If you need guidance on the refinance process you can ask your local realtor at Century 21 Upchurch.
You can also contact one of our partner lenders, Rosanne Fett or Mark Eastin.
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