Should I Refinance My Mortgage?
The decision to refinance your mortgage is a big one. It’s important that you know all of the reasons why this could be an option for you. The following article will discuss the pros and cons of refinancing. We encourage you to consult with a professional mortgage company like ours to get vital information before making a decision.
What Does it Mean to Refinance a Mortgage?
Refinancing is the process of taking out a new mortgage to replace your old one, often at a lower interest rate so you can save money or “pull out” cash from your equity to have on hand.
Refinancing allows you to take advantage of falling interest rates to lower what you pay each month and potentially pay off your loan sooner.
Change Your Loan Type with Refinancing
Refinancing can also be used to change the type of loan you have, such as switching from an adjustable rate mortgage (ARM) to a fixed-rate one or switching from a 30-year fixed-rate mortgage to 15-year fixed-rate one.
Refinancing often lowers your monthly payment and allows you to pay your loan back faster while at the same time keeping your interest rates fixed for the life of the loan.
The Benefits of Refinancing
There are several reasons why someone might want to refinance their home, but in general refinancing is a good choice if:
- The current interest rate on your home’s existing loan is higher than current market rates.
- You want to shorten the term of your loan.
- You plan to go from an ARM to a fixed-rate one.
If you are refinancing for any of the above reasons, it is very probable that you will be able to save money by doing so. However, there are also several reasons why someone might not want to refinance their home.
The Disadvantages of Refinancing
In some cases, refinancing doesn’t make financial sense. Such as:
- Your existing interest rates are already low and may get even lower in the future.
- The benefits of refinancing your home’s current loan do not outweigh the closing costs involved with doing so.
- Loan fees associated with refinancing will take longer than the term of the new loan to earn back through lowered interest rates.
- You plan on moving or selling your home sometime in the near future.
If none of the above reasons apply to you, refinancing may be beneficial. However, consult with your lender or mortgage finance company to get help determining if it makes sense for you financially.
Contact First Coast Mortgage Funding today to get the help you need to refinance your mortgage with the lowest interest rates and fees in the industry!