Did you know mortgage interest rates are at a three-year low? What does this mean for you? Depending on your mortgage loan, you may be able to decrease your interest rate by 1% or more if you refinance. Now may be the perfect time!
Benefits of Refinancing Your Mortgage Loan
- Snag A Better Rate.If your mortgage rate is above 4%, right now is a great time to find out about refinancing. Lowering your rate just a quarter of a percent can save thousands of dollars on the total loan. Since mortgage rates are trending lower, the time may be right to check out how much money you could save by refinancing your home loan.
- Lower Your Monthly Payment. If your monthly budget is stretched to the limit and you’d like some breathing room, refinancing may help. With a lower rate, you could decrease your monthly payment This would free up money for other things like savings, education, or unseen emergencies. In addition, you might decide to refinance to a longer payoff (for example, from a 15-year loan to a 20-year loan) to decrease your monthly payment even more.
- Build Equity Faster. Do you want to build equity in your home as fast as you can, but you can’t afford to add extra money to your monthly payment? Refinancing can make it happen in certain situations. If the rate is less when you refinance, you might be able to get into a shorter-term loan. That way, more of your payment will go to your debt every month, which increases your equity. And you probably won’t have to pay a dollar more!
- Get Out of Paying PMI. Depending on your original down payment, a percentage of your monthly mortgage payment could be going to costly mortgage insurance (PMI). If you’ve accumulated quite a bit of equity and would only need to refinance under 80% of the home’s value, refinancing may be able to get you out from under your PMI payments. This can help more of your monthly payment go toward your debt, so you build equity much faster.
- Tap Into Your Equity for Cash. There are times in life when you need an influx in cash. Perhaps you want to update your kitchen, send a kid to college, or take the vacation of a lifetime. Why not use your home’s equity to see those plans become reality? Some refinancing options allow you to take cash out of your equity and roll that amount into your mortgage. This way you don’t go into credit card debt paying for the things you need.
- Speaking of credit cards… Consolidate Your Debts. Credit cards are a financial drag and almost impossible to pay down. A refi is a smart way to pay off your credit cards. Simply roll them into your mortgage loan, and they’re history. If you can get approved for a low enough rate, your monthly mortgage payment might not even go up.
- Pay Off Your Mortgage Sooner. If your goal is a paid-off home, refinancing can help you achieve it. Why not take advantage of today’s low rates and decrease your mortgage loan term? Going from a 30-year to a 15-year loan cuts the time you’re paying on your mortgage in half. You’ll more quickly reach financial security and can use that monthly mortgage payment money to save or to buy other things.
- Cash-Out Refinance. A cash-out refi makes sense if you need to use the equity in your home. Whether it’s to spend, pay off debt, purchase a vehicle, or finance education, this refinancing plan can get you the money you need.
- Change Your Loan Program Type. Perhaps you chose an adjustable rate mortgage when you originally bought your home. Or you opted for a 30-year mortgage. If your situation has changed, your salary has increased, or you just want to take advantage of the great interest rates, changing your type of loan might be a smart move. By refinancing, you essentially start over with your loan program. You can work with your mortgage originator to pick the loan that fits with the goals you’re trying to achieve for you and your family.
- Underwater Loan Refinancing. If your home is worth less than you owe on it, you may feel like you’re just stuck. That’s not the case! There are refinancing paths for you. If your mortgage is owned by Fannie Mae or Freddie Mac, you may be able to take advantage of the Home Affordable Refinance Program (HARP). If you have a VA, FHA, or USDA loan, a streamlined refi may be the option for you. The Home Affordable Modification Program (HAMP) is a third option to help you reduce financial hardship. If you face any of these situations, talk to your loan officer about the best program for you.
If you’re paying a mortgage, refinancing may be a smart move. By looking at your financial goals and talking to one of MIG’s knowledgeable loan originators, you can feel confident that you are making the best choices for your mortgage and your future.