Posted on: 4 May 2016
As a homeowner, staring down many more years of payments can leave you feeling frustrated. If you've been wondering about whether or not refinancing can help you, there are a few things you should consider. Here are three situations where refinancing your mortgage may be a good idea.
You Can Shorten Your Repayment Term
Refinancing your mortgage may allow you the opportunity to shorten your repayment term. As an example, if you bought your home with a 30-year mortgage five years ago, you can refinance to a 15- or 20-year mortgage and reduce your repayment time significantly. This may even save you in interest payments since interest accumulates throughout the life of the loan. If you can afford the potential of a higher monthly payment, refinancing to a shorter term may be an ideal option.
You Could Reduce Your Monthly Payment
If you're struggling with your payments because they are higher than you can really afford, you may find that refinancing can help. If you refinance the loan into a longer repayment term, that will reduce your monthly payments. This won't necessarily save you money in the long run, but it will help to reduce your monthly payments to ease your expenses.
You Could Swap Your Adjustable Rate For a Fixed One
If the mortgage you were approved for came with an adjustable rate, the amount you pay every month is unpredictable. If the market rates increase, your payment will go up as well. If you cannot afford a significant increase in your monthly payment, you might want to think about refinancing for a fixed rate instead. Once you have a solid payment history, you might qualify for a fixed-rate loan that you might not have qualified for before. A fixed rate may allow you to budget more consistently, reducing the strain of financial unpredictability.
You Might Reduce Your Mortgage Insurance
If you have paid enough into your home mortgage to reduce the principal significantly, you might have enough equity in the house to either reduce the protection on your mortgage insurance or even drop it completely. Check with your mortgage company to see what your options are for your mortgage insurance coverage and premium payments.
As you can see, there are definitely some reasons why you should consider refinancing your mortgage. Talk with your lender today about the choices available to you to see which one will save you the most. Contact a business, such as Liberty Escrow Inc, for more information.Share