How Refinancing Your Home Could Help You Stop Wasting Money
Most people will tell you that refinancing a home is difficult, but they may fail to mention how advantageous the process can be. Ultimately, refinancing your home can save you money. Maybe you’ve suffered a reduced income, increased bills, or some other financial crisis. Whatever the case, if you’re having difficulty making monthly mortgage payments, consider refinancing.
What Is Refinancing?
By refinancing your mortgage, you are applying for a new loan. Did you buy your home at a time when interest rates were higher than they are now? If so, refinancing your mortgage can help you obtain a lower interest rate and help save you money on your monthly mortgage payment.
If you are in an adjustable rate mortgage, then at the time of your refinance, you may also want to consider going into a fixed-rate mortgage. Being in a fixed rate means that your interest will stay the same rather than fluctuating on you. This is another tactic you can use to help you save money when refinancing on your home.
If you think that refinancing may be the choice for you, it may be helpful to try a refinance calculator. A tool like this one will help you determine whether refinancing is the right course of action.
When Should I Refinance?
In many cases, refinancing will save a homeowner money. But that’s only if the process is completed at the right time. Although the process can save you money over time, it will cost money to have your home appraised and apply for a new loan.
Be sure to study the market and answer these questions:
- Does refinancing secure me a lower interest rate?
- Am I shortening the terms of my mortgage?
- Will I be able to secure a fixed-rate mortgage—rather than an adjustable-rate one?
- Overall, will this process help me to consolidate debt?
If you end up answering “yes” to more than one of those questions, refinancing may be in the best interest of you, your family, and your bank accounts.
How Does Refinancing Save Me Money?
We’ve talked generally about how refinancing can save you money. But here are some specifics:
According to Sente Mortgage, a home loan company that specializes in refinance in Austin, Texas, there are a few saw that refinancing your home can save you money.
- Lower interest rates. Since you first purchased your home, certain factors may have changed. For example, now you might have a higher credit score, fewer debts, or increased home equity. Any one of these factors may be enough to help you secure better interest rates with a new loan.
- Change loan types. Do you currently have an adjustable-rate mortgage? If so, your payments and rates may change with the market. Sometimes this is a good thing, but often it can lead to more money spent by you. If you’re ready to settle on a fixed-rate loan, refinancing can help you do just that.
- Lower monthly payments. Of course, when you change the loan type, you change your monthly payment plan as well. If, for example, you switched from a 15 year mortgage to a 30 year mortgage, you monthly payment would decrease.
Refinancing a mortgage is not for everyone! There are some cases where refinancing your home will not save you any money and ultimately not be worth your time. But it can save you money and lower your interest rates.
Therefore if you are considering refinancing your home, get in touch with your local mortgage broker to learn more about your options.
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