The process of becoming a homeowner requires many decisions, but one of the biggest is determining the type of mortgage you need. Once you’ve secured a mortgage, you might think that you’re locked into the terms of the loan for its term. However, home refinancing can be advantageous in the right circumstances.
Is It Best for You to Refinance Your Mortgage?
What Does Home Refinancing Entail?
Home refinancing is the process of paying off the current mortgage on your home and implementing a new one in its place. You may have a change in your financial situation, want to consolidate debt, or secure a loan with different terms than your current one. In addition to the cost of the mortgage itself, home refinancing includes costs for loan appraisal, title search, and the application, so learn when it’s appropriate to refinance.
When Should I Refinance a Mortgage?
You should refinance a mortgage to lower your payments or shorten the timeline of the loan. Due to the changes in your mortgage, you can tackle debt more efficiently. However, since refinancing comes with fees, make sure you can offset the costs.
Refinance if you see yourself remaining in your house for more than a few years. That way, you benefit from the terms of the new loan while preventing yourself from losing money due to the fees of refinancing. In addition, you may want to refinance if the mortgage rates decrease. A 1% drop in mortgage rates can lead to massive savings, particularly if you have a 30-year loan.
When Is It Not Appropriate to Refinance a Mortgage?
You shouldn’t refinance a mortgage if you want to extend the term of your loan, save money for your next house, or take out cash for investing purposes. All of these lead to you spending additional money since you’re making more payments and increasing the interest owed. Also, if you plan to sell your house in the next few years, avoid refinancing since the costs won’t offset the savings.
Do you need help deciding whether home refinancing is right for you? Movement Mortgage in North Haven, CT, has the expertise necessary to make home loans a stress-free process. Created in the aftermath of the 2008 financial crisis, their team is committed to making a change in the mortgage industry by offering a straightforward, simple loan approval process. They’re also proud to be recognized as the fastest growing mortgage bank in the country. Call (203) 215-5133, or visit the website to find the right loan.
