Happy Thursday!!
Let's talk about refinancing: the word can be a bit misleading. I would like to discuss exactly what refinancing your mortgage entails and why it might benefit you.
When you refinance your home, you are taking out a new mortgage and using the proceeds to pay off your old mortgage. In actuality, you are trading your old mortgage for a new one.
I found that refinancing your mortgage can help you achieve these benefits from mortgageloan.com:
· Take advantage of lower interest rates that will lessen your monthly mortgage payments.
· Decrease the length of your mortgage to pay it off faster and save on interest charges.
· Increase the length of your mortgage and spread out the costs for lower monthly charges.
· Change the terms of your mortgage from an adjustable rate mortgage to a fixed-rate mortgage or vice versa.
· Refinance for a higher loan amount and get quick funds for home renovations, college tuition, medical costs, or other expenses.
Refinancing your mortgage can also be costly. It’s best to weigh your options and make sure that refinancing is best for your situation. Here are a few instances where you may want to consider refinancing:
· If you have a fixed rate mortgage and the rates have fallen to levels below the rate that you are paying.
· If you have an A.R.M. and rates are starting to rise.
BUT:
· If you are less than ten years into your current 30-year mortgage and rates are lower than what you are paying now. If have been paying your mortgage for longer than that, you are currently paying more principal than interest. If you get a new mortgage, you start the cycle over again and will be paying mostly interest again, which may not make sense.
The easiest way to figure out whether or not it’s worth it to refinance is to use one of the many available online refinance calculators. They will help you to determine how long it will take to recoup the expense of refinancing with the new savings.
Try these free online refinance calculators:
If you have any additional questions about refinancing your home, you may stop in or call us here at Systematic Savings Bank. We would love to talk to you about any of your banking needs. :)
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