Refinance Guide

by | Mar 2, 2021 | 0 comments

Is a refinance right for you? 

Before you decide if you are ready to refinance, think about your goals and what you hope to get out of it. Are you looking to take cash out? Are you hoping for a lower payment? Or are you looking to shorten your mortgage term?

Evaluate if you are ready to refinance

  • Do you know your credit score and what you will be eligible for when refinancing your mortgage?

  • Do you know your monthly payment?  Will you be able to afford to pay a little more if your mortgage goes up, or do you know how much your payment needs to go down for the refinance to be worthwhile?

  • Do you know the value of your home? Knowing the value of your house can help you know how much equity you have and what you will be working with.

  • Do you know your Debt to Income Ratio? If your monthly debt payments are too high for your monthly income your chances to refinance might be limited.

Taking Cash Out:

  • Refinance for more than what you owe and take the difference out.

  • If you have been paying on your loan for a while and have equity this can be a good option to take money out to pay off other debts.

  • If the value of your home has increased, you might be able to qualify for a higher loan to finance it, allowing you to take out money and put it elsewhere.

Lower Monthly Payments:

  • Paying less each month on your mortgage means you will have more free money to budget with.

  • If rates have gone down from when you bought your house, getting a lower rate can bring down the amount of interest you pay each month and can save you money in the long run.

  • Refinancing when you have more equity can mean that you no longer need mortgage insurance. Mortgage insurance can cost you up to hundreds of dollars every month and by refinancing at the right time you can eliminate this cost.

  • You can also lower your payments each month by refinancing and changing the mortgage term. If you extend the term, you lengthen the years on the loan, which lowers your monthly payment.

Shorten Mortgage Term:

  • Shortening your term is a great way to save money on interest. Shortening your mortgage term can qualify you to receive a better interest rate, which when combined with less years of payment equals huge interest savings.

  • One thing to note, shortening your term can increase your monthly payments. Before deciding this is what you want to do, make sure you have the monthly income to support the decision.

  • While monthly payments may go up, when you shorten your term you are paying more each month on the actual loan rather than on interest. This will save you money in the long run.

Let us know if you have any questions or if you think you are ready to refinance. Call us at 801-960-2111