When To Refinance Your Mortgage

When To Refinance Your Mortgage

Should you refinance your mortgage? This is a question that millions of people are asking themselves as interest rates continue to hover at all-time lows. While mortgage rates are at an all time low that does not necessarily mean that everybody with a mortgage should refinance. However, for the majority of homeowners now is the best time ever to take advantage of current interest rates and lock in a lower monthly payment on a mortgage. This article will outline the top 5 reasons to refinance a mortgage and hopefully provide helpful information to homeowners.

1. Get a lower monthly payment.

By refinancing your mortgage when interest rates are lower, you can exchange a higher interest rate for a lower one which will, in turn, lower your monthly payment. For the millions of people who are struggling to meet their monthly payments, locking in a lower monthly payment can be very helpful to the overall financial health of a household.

2. You can shorten the length of your mortgage when refinancing.

Let's say, for example, that you originally had a 30-year mortgage and have been paying it now for seven years. Thanks to the mortgage refinancing, you can switch to a shorter term loan of either 10, 15 or 20 years. This can save you thousands of dollars of interest.

3. You can apply for cash out financing which will put more money in your pocket by taking the equity you've built in your home and putting cash in your pocket.

You can refinance your mortgage for an amount higher than your current principal balance and take the extra funds as cash. This can provide money for adding on to your home, paying off high-interest bills, or starting a college fund for your children

4. You can get rid of Private Mortgage Insurance if you have built up over 20% equity on your loan.

Most of the time Private Mortgage Insurance is required for consumers who cannot put down at least 20% down payment when they bought the home. However, when you refinance, you might very well have established over a 20% equity share and can get rid of this extra expense

5. When you have an Adjustable Rate Mortgage and would like to switch to a Fixed Rate Mortgage.

If you have an ARM (adjustable rate mortgage) then your mortgage payments will fluctuate each month and never be the same. If you do not like the uncertainty that comes along with ARM mortgages, then you can refinance your mortgage to a fixed mortgage and lock in a fixed payment throughout your loan.

Now is never a better time to refinance your mortgage. While interest rates are at an all-time low, they will not stay this way forever so now is the time to act. Refinance lenders will analyze your mortgage and educate you on the benefits and costs to refinance. I would highly suggest that you receive multiple quotes from various refinance lenders so that you can get the best deal. The most popular way to receive multiple quotes is to visit multiple lender websites who is affiliated with top lenders. Most of these websites are free to the consumer and will provide you up to four different quotes by filling out only one online application