The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
4 Reasons to Refinance Your Mortgage
Your life situation isn't permanent, so why should your home loan be? Refinancing lets you regain ‘home loan zen’ by creating new terms that work for you in the here and now. If it’s your first time refinancing, know that a home loan refi may:
- Shorten your home loan terms
- Get you lower interest rates
- Lower your home loan payment
- Enable you to change the type of home loan you have
- Allow you to access cash you've earned through equity
- Enable you to stop paying monthly home loan insurance
Here are some reasons to consider refinancing your home loan to take advantage of low interest rates now.
Reason #1 — Interest Rates Could Go Up
In 2018, the Federal Reserve raised interest rates for the sixth time since the financial crisis of 2008. If you want access to lower rates than you currently have on your mortgage loan, now is absolutely the time to look into refinancing. Down the road, rates may be even higher than what you're currently paying, and you could be stuck with the rate you have until they cool down again.
Reason #2 — Are You Making More Green These Days?
Maybe you got a raise or an inheritance — or you sold the shiny sports car that just sat in your garage. Whatever the circumstance, if you have more money now than you did when you got your home loan, you could benefit from the lower interest rate of a shorter-term loan. For example, a 15-year home loan requires a higher monthly payment than a 30-year loan, but its lower interest rate creates more long-term savings.
No one likes having bills to pay. If you can eliminate your home loan payment more quickly, you can get rid of one more thing to worry about and truly get settled into your abode. And if you're not the type of person who wants to work forever, paying more toward your home loan now can give you a boost in your budget come retirement age.
Reason #3 — Lock in a Fixed Rate
When you bought your home, maybe you went all googly-eyed at the sight of low interest rates offered with an adjustable rate mortgage (ARM). Or, perhaps you didn't realize at the time that your house purchase would be your “forever home,” and now you've fallen deeply in love with your digs.
While an ARM often starts with lower monthly payments, the amount you owe each month can go up significantly over time. As interest rates climb and climb, you might be feeling the pain in your wallet.
Refinancing allows you to change to a fixed-rate home loan so that you can lock in lower rates and rest easy knowing your rates won't fluctuate or skyrocket on the Fed's whim. Your home should be your happy place — not a source of stress.
Reason #4 — Lower Your Monthly Bill
Did you take out a home loan when rates were higher than they are now? Refinancing can add more to your cash flow, which you can use to pay for significant life events, such as having kids, starting a business or staying financially healthy after you or your spouse wants to pursue a career change.
There's no risk to looking into refinancing. You may be surprised to find that interest rates were higher when you got your first home loan, and that refinancing now can help you lower your payment.
You Said 'I Do' to Your Home Loan, But You Can Divorce It
A home is one of the most significant purchases that you can make. However, the terms that you agreed to when you first moved in may not work for you now. And that's OK. At Define Mortgage Solutions, we get it: Things change, including your financial situation and how you want to pay for your home over time.
The first step is to talk with a home loan advisor about the refinancing options available to you. You may be able to save more money immediately or in the long term and make your happy home even more blissful with a better home loan.
Mortgage loans are offered by Define Mortgage Solutions, LLC, NMLS ID #1761612, a subsidiary of Desert Financial Credit Union. BK#0949053
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