Refinancing your mortgage can save you thousands of dollars in interest. It can also reduce your monthly payments substantially. You may be asking yourself, "when should I refinance my mortgage?"
We’ve put together a list of some signs you should refinance your mortgage today!
1. Your rate is higher than current interest rates
Interest rates have been at historic lows. If you closed on your mortgage 5 or more years ago chances are that your interest rate may be higher than the current rates today. This is the number one reason you should refinance your mortgage, to lower the rate. Reach out to a Greenway Loan officer today to find out if you can get a lower rate by refinancing your mortgage loan.
2. You want to lower your monthly payment
Lowering your monthly payment is something that a mortgage refinance can help you achieve. Not only by reducing your interest rate but by stretching the loan payments over a longer term.
3. You want to make home improvements
Cash-out refinances, home equity loans, and HELOC loans allow homeowners to get a loan using the equity in your home. You can learn more about cash-out refinances here.
4. You’re close to retirement
This depends on your individual situation. If you are close to retirement and you still have several years left on your mortgage. Refinancing into a lower rate and payment will allow you to more comfortably afford your mortgage payment each month on a reduced income. If your home is paid off then you may want to consider a reverse mortgage. A reverse mortgage is where you receive monthly payments or a large up-front sum of money using your home’s equity.
5. You have an adjustable rate mortgage (ARM)
An adjustable rate mortgage has an initial term with a low fixed rate for a certain number of years. After the initial term the rate increases on an annual basis. Because of the increasing rate you would most likely save money by refinancing into a fixed rate mortgage.
6. You have high interest debt to consolidate
If you have a large amount of debt with high interest, you could refinance your mortgage into a lower rate home equity loan or cash-out refinance can save you thousands of dollars in interest. Keep in mind that its not advisable to convert your unsecured debt into debt that is secured by your home. For example, if you come across a financial hardship and you cannot afford to repay the loan your home may be subject to foreclosure.
7. You just want cash to spend
Maybe you’re not looking to renovate your home and you do not have high interest debt to consolidate. Perhaps your looking to take a vacation or buy a new car. Using the equity in your home to convert it into cash can be an option. A cash-out refi or HELOC loan can give you cash for your equity.
8. Your credit score has increased since you closed
If your credit score was lower when you got your original mortgage chances are the rate your received is much higher than what you could receive today with a much higher credit score. Remember, you’ll want to increase your credit score before applying to refinance you mortgage. Make sure you’re paying off any credit card balances, too!
Refinancing your mortgage into a lower rate is often a very good idea. Reach out today to discuss your options! We are happy to help. 732.832.2967.