Mortgage Refinance
Mortgage Refinance can provide you extra cash to pay bills and get out of debt, check out our new lower refinance rates for existing home owners.
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| *Rates contain points. |
The most common reason to refinance your existing mortgage is to take advantage of the new lowest interest rates and saving money on monthly mortgage payment.
While that may be reason enough, there are other reasons why you might want to refinance. Listed below are some of the other ways refinancing can also benefit you. See if any apply to you.
Reduce Interest Costs
Take advantage of lower rates
Interest rates are now at a 30 year low, if current interest rates have dropped since you secured your mortgage, you may be able to get a new loan (or 'refinance') with a lower interest rate. Refinancing would then reduce your interest costs (unless you plan on increasing the term of the loan) and possibly your monthly payment costs.
Get a shorter term loan
By moving into a new mortgage with a shorter term, you can sometimes reduce interest costs (even if interest rates haven't declined) By simply reducing the term of the loan, you would typically save thousands in interest costs.
For example, if you now have a 30 year fixed interest mortgage, you can often reduce your interest costs over several years by switching to a 15-year mortgage. This type of mortgage generally has a lower interest rate.
Get a new ARM
If you have an adjustable rate mortgage (also known as an ARM), and it has adjusted up, you may be able to save money by refinancing with another ARM. Since ARMs usually have a low interest rate until the first adjustment, you can reduce your interest rate for that introductory period.
Many people are unaware that they can achieve the same with a 30 year loan by increasing the payments they make every month by a small amount.
This pays off the loan more quickly but doesn't incur the expense of refinancing, and doesn't lock you into the higher monthly payments.
What would happen if you lost your job? With a 15-year mortgage you would have no flexibility. If you had voluntarily increased your payments on your 30-year loan, you could drop back to the minimum payments anytime you want.
You do need to be careful of not paying so much extra each month that you would incur a prepayment penalty, if your loan has one.
The advantage of a shorter term loan
Nevertheless, some people prefer the "forced savings" aspect of a 15-year loan, and for them it can make sense.
Additionally, 15-year mortgages usually have slightly lower interest rates than 30-year mortgages. So, a 15-year mortgage can reduce interest costs through both a shorter loan period and a lower interest rate. |
