Refinancing your mortgage can be a great financial decision for many reasons. Before making this decision, however, there are several factors to consider.
Weigh the Reasons for Refinancing
Knowing your end goal for refinancing will help you determine several steps along the way. Here are some reasons why you may want to refinance:
- Lower interest rate and monthly payment: For many homeowners, current rates are much lower than they were when they first purchased their home. Refinancing for a lower rate will lower your total monthly payment and the total interest paid over the life of the loan.
- Change type of interest rate: When rates are low, those who initially went with a variable rate loan can make the switch and secure a low, fixed-rate loan.
- Modify loan terms: When you refinance, you can opt for higher monthly payments to shorten the loan term and save on total interest. On the other hand, if you are needing to lower your monthly payment to free up cash, you can extend the life of the loan.
- Consolidate debt: Mortgages typically have much low-interest rates compared to other forms of debt. You can refinance to access the equity you own in the house to put towards other debts that are accruing higher interest rates.
Weigh your Options for Refinancing
After reviewing your goals for refinancing, you will also need to assess the different types of refinances to determine which is best for you.
- Cash-Out Refinance – If you wish to receive cash from current equity, you will want to consider a cash-out refinance. With this option, an existing mortgage is replaced by a new loan for more than you owe on your house. The difference between these amounts will be given to you in cash.
- Rate-and-Term Refinance – To lower your monthly mortgage payment, opt for this type of refinancing and modify the loan rate and/or the term of the loan. If you needed a cosigner to qualify when you first purchased your home, or were required to pay mortgage insurance, you can remove them with this type of refinancing.
Use an Advanced Mortgage Calculator
Before you begin the process of refinancing, you will most likely want to estimate the costs associated. This is why we have created an advanced mortgage calculator for you to see the various factors associated with refinancing your mortgage. While we recommend consulting an experienced mortgage professional to accurately discuss the options that best meet your home financing needs, this is a useful tool that will provide an overall picture of your monthly mortgage payment after refinancing.
Refinance with Spire Financial
If you are interested in taking advantage of the current low-interest rates, Spire Financial has what you need to get started. Our loan experts are here to help you assess your options to determine the best strategy for you and your financial goals. We not only make refinancing possible, but we make it simple. Contact us today to discuss the benefits of refinancing your mortgage.