What do you see when you look at your mortgage statement? A payment that’s a bit too high? An interest rate that should be lower? Many more years of making payments that you’re not sure you can afford?
Depending on the terms and conditions of your current mortgage, you may want to consider the benefits of refinancing. It’s not the right decision for every homeowner, but you’ll never know until you learn more about the process and what it can do for you.
Here are just a few of the benefits that could work in your favor:
1. A Lower Rate
The primary reason to refinance your mortgage is to secure a lower rate. There are many reasons why your rate may be higher than what’s currently offered, such as if you purchased your home when rates were at a peak or if your credit score wasn’t as high as it is now.
By reducing your rate by a percentage point or more, you’re in position to save thousands of dollars over the course of your loan. How does that sound?
2. Lower Monthly Payment
When you lower your rate, you also lower your monthly payment. The only exception is if you decide to reduce the term, such as from 30 years to 15 years.
If a lower monthly payment is what you want – perhaps because you have new expenses in your life – refinancing your mortgage is an option to strongly consider. For many, this is much better than selling their home in search of something that’s more affordable.
3. Shorten Your Term
Take for example someone who took out a 30 year mortgage five years ago. They now have 25 years of payments left, which is a long time.
But what if this person could reduce their rate and term, such as by knocking the 25 years down to 20 or 15? With this approach, they may have a slightly higher payment, but for a much shorter period of time.
4. Consolidate Debt
Maybe you have a home equity loan or line of credit that you’re dying to get rid of. If you don’t have the cash on hand to do so, you can refinance your original mortgage and roll this loan or line of credit into it.
This leaves you with one loan, which is easier to manage. Not to mention the fact that you may be able to secure a lower rate for the totality of your debt.
5. Better Customer Service
There’s nothing more frustrating than dealing with a mortgage lender that makes mistakes, can’t answer your questions, and is unresponsive when you have concerns.
If you’re tired of dealing with this, refinancing allows you to get involved with a lender that provides better customer service.
As you consider the benefits above as they pertain to your situation, you can make a final decision as to whether or not now’s the time to refinance your mortgage.
If you’re interested, reach out to several lenders for a better idea of what the process entails and how to get started.