Refinancing involves paying off the existing loan with a new one, and it’s an option that is more beneficial at certain times than others. Whether your financial footing has improved since you purchased your home or variable rates are beginning to look less attractive, refinancing gives you a second chance to secure a new term and interest rate. Below are a few of the best times to explore this option.

When Refinancing Home Loans Makes Sense

1. Lowering Interest Rates

Interest rates for mortgages are constantly in flux, rising and lowering in response to changes in the economy. As such, it’s important to monitor rates on home loans. Generally, if you can reduce the interest rate by 1%, refinancing is a good idea because it lowers your monthly mortgage payment. Additionally, refinancing when interest rates go down gives you the option to shorten the loan’s term without seeing a drastic change in the monthly dues.

2. Consolidating Debt

By refinancing, you can consolidate high-interest debt with a lower interest mortgage payment. It allows you to pay off debt like credit card payments and student loans using the money from the refinancing to create one lump sum of debt that can be paid off at the lower interest offered with home loans.

3. Increasing Rates on Adjustable-Rate Mortgage

An adjustable-rate mortgage (ARM) usually offers a low interest rate at the start of the home loan, but it’s not locked in and can rise over time. When the adjusted rate rises above the current offering of fixed-rate mortgages, refinancing can offer you a more affordable rate. In addition to lowering the monthly mortgage payments, it also gives you the peace of mind knowing the rate will not be affected by future fluctuations in the stock market.

If you’re considering refinancing your home loan, contact Dan Main in St. Peters, MO. For the past 20 years, he’s helped local homeowners navigate the confusing mortgage market to find the best, most economical option for their home loans. Whether you’re a first-time homebuyer or are considering refinancing for lower interest rates, he will help you make the best financial decision for you and your family. Schedule an appointment by calling (636) 284-4144 or learn more online.

Dan Main: NMLS # 502036
Flat Branch Home Loans NMLS # 224149
947 Waterbury Falls Dr
O’Fallon, MO 63368
This is for informational purposes only and not an offer to lend or extend credit.