The question of refinancing burns in many homeowners minds. It’s a frequent enough question that you can find hundreds of answers and guidance online. But, the question of refinancing is still an overwhelming, and often confusing, subject. It’s the reason our lenders are available to guide you through this process. Your home is your biggest investment. And since we understand that, we’ve acquired the knowledge to answer your questions. This blog will aim to answer some base questions about whether you should refinance your mortgage. But, every person’s situation is different and if you have more questions, we’re here to help!
Refinancing means paying off an existing loan and replacing it with a new one. It often comes with a lot of paperwork—some have said even more paperwork than when you first bought your house. It’s just one obstacle to your final goal. Refinancing happens for a lot of reasons, but the most prominent one is saving money.
What are some advantages to refinance your mortgage?
This is the first question you want to ask yourself: Why do I want to refinance my mortgage? The reasons vary from person to person, but if you know why you want to go through with the process, it’ll allow a lender to guide you towards the right option for you. One of the main reasons is reducing the interest rate. When interest rates drop, many consider refinancing to shorten the term and pay significantly less in interest payments. Other reasons include reducing the length of your mortgage, removing Private Mortgage Insurance (PMI), and switching from an adjustable-rate mortgage to a fixed-rate mortgage. Again, it’s what works best for the homeowner. A lot depends on how long you’ve already been in your mortgage and where you are financially.
Are there risks to refinancing?
The short answer is yes. Depending on your goals and financial situation, refinancing is not always the right choice. When you’re making this decision, weigh out the risks as well. Say you’re 10 or 20 years into your mortgage. Taking out a new 30-year mortgage may not be worth the extra costs. In this case, you can refinance to a shorter-term loan that won’t extend the time. It’s important to do the math behind this decision and talk to someone with extensive knowledge on the subject. Refinancing is not a simple call and click away.
When you’re not sure whether or not you should refinance your mortgage, it’s always a safe bet to call the experts at HomeRate Mortgage. Not only can we help you decide why and what advantages you could gain, but we’ll also be able to calculate your savings and get the right option for you. When you need to save some extra money or want a shorter term on your loan, let us know how we can be of help.