Monica Millican Home > Should You Refinance?
If you’ve heard about refinancing, but just aren’t sure how it works or if it’s the right move for you and your mortgage, I’m here to help give you all the information you need to make the best decision for your future.
Best Times to Refinance
- Mortgage Interest Rates Dropped
Your current rate may have worked for you when you bought your home, but things can change over time. If rates have dropped significantly, you could enjoy cost-saving benefits with a refinance. There are two reasons to refinance to a lower rate:- The first option would allow you to shorten the terms of your repayment while still making the same or comparable payment amounts.
- The other option allows you to lower your monthly payments while keeping the same or comparable repayment term. Either way, you find yourself with a way to save money on your mortgage investment.
- Equity
If your home has appreciated in value over time, you could benefit from a cash-out refinance. With that option, you’re able to turn a portion of your home’s equity into cash to pay toward whatever you need — and as soon as your loan closes, the money is paid to you. You may also choose to refinance to drop Private Mortgage Insurance from your payment, which is possible if the balance on your mortgage is under 80% of your home’s value. - Early in Your Mortgage Term
This isn’t something that’s usually top of mind when you’ve recently bought your home, but six months after your purchase, it’s something to consider if you can make it work. Here’s why: early in your mortgage, most of your payments are directed toward interest. If you’re able to refinance with a lower rate or a different loan term, you could benefit by paying more toward your loan balance instead of interest.
There are many other benefits to refinancing, which I’m always happy to chat with you about. Until then, discover more insights by watching our Refinancing Video that covers more about a mortgage refinance.