Options for Refinancing your Home
Due to the costs involved, refinancing is typically a benefit only if a borrower plans to stay in their home for a minimum of two to five years.
What are the benefits of refinancing?
Get a lower interest rate and lower payments.
A lower interest rate may be available due to changes in market conditions. A lower rate could lower the monthly principal and interest mortgage payment.
Get cash from the equity in your home.
Cash-Out Refinances may allow a borrower with sufficient equity in their property to refinance their mortgage for more than is currently owed and pocket the difference.
Change the mortgage length.
A decrease in the length of a mortgage term (say from a 30 year fixed rate to a 15 year) may increase the monthly P&I payment, but the loan may be paid off sooner. Refinancing to a lower interest rate, with a longer term mortgage will likely provide a homeowner a lower monthly payment; however the total amount of interest paid in the longer term could be more.
Build equity more quickly.
With lower monthly payments, it may be feasible to make additional payments and build up equity in the property more quickly.
Convert an Adjustable Rate Mortgage (ARM Mortgage) to a Fixed Rate Mortgage
Interest rates for an ARM mortgage can increase or decrease. Some people are more comfortable switching to a Fixed Rate Mortgage that has a steady interest rate and a steady principal & interest monthly payment.
If you’re a homeowner and are thinking about refinancing your loan reach out to an On Q Financial Mortgage Consultant to find out if you benefit from a refinance.