Are you interested in paying less per month on your mortgage? Or perhaps you would prefer if your mortgage was paid off a couple of months – or years – faster? If you are a homeowner with a mortgage, one option that is open to you is refinancing. In today’s post, we will explore the topic of mortgage refinancing and how to know if it is a good idea.

How Does Refinancing Work?

In short, refinancing is a process in which pay off your existing mortgage and borrow a new mortgage under a different set of terms. In most cases, homeowners will use the funds from the new mortgage to pay off the old one. Depending on the terms of your new mortgage, there may or may not be cash left over which you can use to invest, pay down debts, make renovations or for other purposes.

Refinancing To A Lower Interest Rate

Mortgage interest rates tend to fluctuate over time and because of this, refinancing to a mortgage with a lower rate is quite popular. If you initially borrowed your mortgage when interest rates were at 5%, you may be able to lock-in a new mortgage at a lower rate. Note that it can be tough to try to “time” the mortgage market, so check in with your mortgage professional to find out if the time is right.

Refinancing For Lower Monthly Payments

Another great use of refinancing is to reduce the monthly payment required on the mortgage. If you have ten years remaining on a 20-year mortgage, refinancing to extend the payments out to 15 years will lower the monthly payment.

Refinancing To Eliminate Other Debts

Finally, many homeowners will refinance their mortgage to use some of the home’s equity to pay off other debts. For example, a family might have $25,000 in debts that are being charged a higher interest rate than their mortgage. If they have built up enough equity, they can refinance and draw out $25,000 from the home’s value. This shifts the debt from the higher interest areas into the mortgage, where it can be paid off over time.

As you can see, there are many reasons why you might want to refinance your mortgage. To learn more about the refinancing process, or to discuss your options, contact us today. Our professional team of mortgage advisors is ready to help you choose the path that best suits your financial needs.

There are so many unfamiliar terms involved in the real estate market that it can be easy to be confused by the jargon. However, some words are more important to learn than others if they can end up benefiting you in the long run. Whether or not you’ve heard of mortgage refinancing, here are the basics on what this may mean for your home and whether or not it’s an option you should consider.

Acquiring A Lower Rate

If you’re new to refinancing, the primary reason that most homeowners choose this option is to get a lower interest rate and pay less on the overall cost of their mortgage. Because a lower interest rate means that a higher amount is paid on the principal each month, you may be able to pay off your mortgage at a quicker rate. While this may sound ideal, you’ll need a certain percentage decrease in your interest rate in order to make this option financially beneficial.

A Shorter Loan Term

While refinancing doesn’t necessarily mean that you’ll be paying less on your mortgage payment each month, it does mean that you may be able to take advantage of a shorter loan term. Since the overall amount you pay on your mortgage may be lowered with refinancing, you may be able to pay off your mortgage more quickly without it bumping up the amount of your monthly payment significantly. There may be a slight difference, but the benefits can definitely outweigh the drawbacks when it comes to paying less over time.

Weighing The Refinancing Option

The decision to refinance may very well end up being a boon for your financial well-being, but it’s important to consider the pros and cons ahead of time in order to make an educated decision. You’ll also want to make sure you’ll be staying in your home a while to reap the benefits of your equity. Because there will be fees associated with utilizing this mortgage option, like closing costs and application fees, it’s important to look over the numbers and ensure that it works out in your favor at the end of the day.

Refinancing your home to acquire a lower interest rate can be a great financial decision, but it’s important to determine whether or not the price is right before you move forward with this option. If you’re currently considering refinancing your mortgage, contact one of our mortgage professionals for more information.

From choosing a real estate agent to finding the right home, the process of getting a mortgage is rife with many different choices. If you’re investing down the road, it’s likely that you’ve heard about variable and fixed interest rates and are wondering about the differences between the two and how they can benefit you. While what will work best for you depends on your financial flexibility and market knowledge, here are some basics that will help you make a decision.

The Details on Fixed Rates

For many homeowners new to the market, the stability of a fixed rate is comforting because the interest rate will be set for the length of the loan period. This means your monthly mortgage payment will be the same and you will not be required to adjust your budget each month. While knowing your rate can offer financial security in a fluctuating market, it may actually end up costing more money down the road depending on what the rates are like over time.

All About Variable Rates

A fixed rate can provide security, but a variable rate is much like it sounds and will fluctuate with the market interest rate. This means that your monthly mortgage payment will not be fixed and in the event of market increases or decreases, your mortgage payment may change markedly. While the benefit of variable rates is that they can actually end up costing less down the road, they can be a burden for those who do not have market knowledge and are going to feel the stress of changing rates.

Choosing Between The Two

While it’s expected that interest rates will rise in the coming years, there are still no guarantees that variable rates will end up costing more than a fixed rate. This means that if you are comfortable with the fluctuations, a variable rate may be better, but if it’s consistency you’re looking for, you may want to choose a fixed rate. If you are struggling with financial stability month-to-month, a variable rate may be more economical over time, but a fixed rate will offer the security of knowing your costs.

There are benefits associated with fixed and variable rates, but it’s important to determine how comfortable you are with the real estate market and your finances before making a decision. If you’re currently in the market for a new home, contact your trusted mortgage professionals for more information.