There's an old adage in the mortgage business: if you can improve your interest rate by at least two percentage points, then it is a good time to refinance. While that may work as a general rule, the truth is that there are many reasons to refinance. Here are a few:
- Lower your interest rate
This can make a big difference in your monthly out-of-pocket costs for housing and save money on financing fees.
- Build equity faster
If you are in a position to make higher monthly payments due to an increase in salary or other good fortune, you may want to switch from a 30-year loan program to a 15- or 20-year loan structure. This enables you to build equity faster and save money on financing fees.
- Change your loan program
Some homeowners who start out in an adjustable rate mortgage (ARM) find that they would like to switch to the stability of a fixed rate mortgage. A loan comparison chart can help you find out if you can save money with another type of loan program.
- Take advantage of improved credit score
If your credit score has improved as a result of making your mortgage payments on time and in full, you may be in a position to take advantage of your improved credit standing. We can review your current credit score, the terms of your existing mortgage, and review options for other loan programs that could not only reduce your monthly payment, but also save you money on interest fees paid over the life of the loan.
- Use the equity you’ve established
A cash-out refinance allows you to tap into the equity you have built up in your home. You may want to pay off debt, send a child to college, or use the money for home improvements. And, if you are currently paying for mortgage insurance and your loan-to-value has decreased, you may qualify for a loan without mortgage insurance.
Regardless of your reasons for wanting to refinance your existing mortgage, we can help you make a decision that works best for you.