There are many reasons for refinancing a mortgage. If you want to save more money in the long run, you want to pay off your mortgage loan more quickly, or you need some extra money, or you just simply want your monthly payments to be lower, refinancing may be right for you. If, however, you are almost done paying off your loan, or your home value has gone way down, refinancing may not be right for you.
If you are able to get a lower interest rate than what you are currently paying (one that is at least 2% lower to make refinancing worth it), then chances are you will be able to save a lot of money in the long run without having to increase your monthly payments. If you shorten the length of your term, you will also be able to save a ton of money in the long run, but chances are, your monthly payments will be much higher (enabling you to pay off your loan more quickly).
If you need lower monthly payments to free up some extra money, getting a lower interest rate will most likely enable you to do that. You can most likely get a lower interest rate by waiting until the current interest rate in the housing market is low, or taking the time to improve your credit enough that you will be able to qualify for a much lower interest rate. If you cannot get a lower interest rate, and you need lower monthly payments, you can also refinance to extend the term (take longer to pay off the loan). By extending the term, however, you will be paying more in the long run since you will be paying more in interest since it will take you longer to pay off your loan.
You can also lower your monthly payments lots of times if you are able to consolidate two mortgage loans into one mortgage loan since second mortgage loans generally have much higher interest rates. You can do this if you have enough equity in your home, or you have paid off enough of your loan. If you need a lot of cash fast, you can also refinance to take out the equity you have built up in your home to convert that equity to cash. You may also save a lot of money by changing from an adjustable interest rate to a fixed interest rate, or vice-versa.
Start on a refinance mortgage today!
