For lots of homeowners, refinancing is an opportunity to get a lower rate, tap into home equity, and much more. However, several factors play into refinancing your home, and it’s important to fully understand the process, and evaluate if refinancing is right for you.
Pro: Most likely you can lock in a lower interest rate.
Lots of things change in the time between your initial home purchase and now: your financial situation, the state of the market, and your home’s value. A lower interest rate on your mortgage means smaller monthly payments, and more of your payments going toward paying off the principal of your loan.
Con: Depending on your current rates, the savings may be minimal.
There’s no guarantee just how much you’ll save if you refinance your home. If your financial situation hasn’t changed much since you first took out your loan, you may not see a large change in interest rate or monthly payments. There are often fees associated with refinancing, and it’s important to weigh just how much you’re willing to spend, verses how much money you’re saving.
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Pro: This is a great time to move a 30-year term to a 15-year term.
During the life of a 30-year loan, you’ll pay more on interest. Refinancing at a time when rates are low, not only switches your loan to a shorter term, but can help you save money on interest. Plus, paying off your loan quicker, means you’ll be debt-free faster, even if your monthly payments don’t change.
Con: Refinancing takes time.
Refinancing your home is not something you can do in a day. It takes a lot of resources, time, and money, to secure a lower rate. This can be taxing on your life, especially if you don’t see a large change in payments or interest.
Pro: You might be able to pull cash out of the equity you’ve built.
As you’ve owned your home, made improvements on it, and paid off your mortgage over the years, you’ve built up a stockpile of equity tied to your home. Refinancing can provide access to some of that equity, giving you a safety net of money.
Con: There are fees associated with refinancing.
There are costs associated with refinancing. It’s important to evaluate your budget, and see if a refinance is the right decision and how much money you’d save.
We’re here to help.
Refinancing can be a wise decision, and can allow you to lower your monthly payments, or get a shorter loan term. However, it’s important to evaluate both sides of refinancing, and seeing if it’s right for you. With our expert staff, we can help guide you through the decision-making process and find what is right for you. Contact us at (800) 332-0190 or visit our Central Bank Mortgage Center for more information!