Deciding whether or not to refinance your mortgage can be a daunting task. There are many different factors to consider, making it difficult to decide when refinancing is worth it. However, refinancing can definitely be a smart financial move in certain situations. At Home Financing Center, we’re here to help our clients learn about refinancing and when it’s worth it or when it may not be the best option.
When Is Refinancing Worth It?
Lower Interest
A lower interest rate is one of the most common reasons people choose to refinance their mortgage. If interest rates have dropped since you first obtained a mortgage, refinancing can help you secure a lower rate and save you money on interest. This can add up to thousands in savings over the life of your loan and even lower your monthly payment, too!
Fixing Your Rate
If you have an adjustable-rate mortgage (ARM) and want to switch to a fixed-rate mortgage, refinancing is the way to go. ARMs typically start with a lower interest rate, but over time the rate is likely to increase, causing your monthly payments to go up. By refinancing to a fixed-rate mortgage, you can ensure your interest rate will remain the same throughout the life of the loan.
Shorten Your Loan Terms
Refinancing can also help shorten the term of your loan. If you are currently paying off a 30-year mortgage and can switch to a 15- or 20-year mortgage, you may save a significant amount of money in interest over the years. This option is great for those who have a large sum of money saved or have paid off other debts and want to put that extra money toward paying off their mortgage.
Debt Consolidation
Consolidating debt is another great reason to refinance. If you have multiple high-interest debts, such as credit cards or personal loans, refinancing your mortgage to include these debts can reduce your overall interest rate and lower your monthly expenditure. It is important to carefully consider long-term implications of consolidating debt into a mortgage because you could end up paying more interest in the long run.
Ultimately, refinancing can make a huge difference on whether you can achieve your financial goals or not. At Home Financing Center, we’re here to help our clients figure out what’s right for them and their goals, so contact us today to learn more about refinancing and if it’s right for you!