Your home is most likely the biggest investment you have, so refinancing your home is not to be taken lightly. Refinancing your home can be a great way to save money or even improve your financial situation, however before you refinance, you need to determine if you are refinancing for the right reasons and if the market conditions are right for refinancing.


1. Mortgage Rates are at 60 Year Lows – Lowering Your Monthly Payment 

Refinancing saves you money every month by lowering your interest rate and the size of your monthly payment, so you’re paying less to live in your house than the previous month.

Even if you owe more on your home than it’s currently worth, ask your lender about refinancing programs like the HARP program, FHA streamline or a VA IRRRL refinance.

2. Reducing Your Risk – Changing an ARM (adjustable rate mortgage) into a Low Fixed Rate Mortgage

During the last housing boom, many homeowners took adjustable-rate      mortgages, or even worse, interest only loans, which are now coming due and  getting set to increase. Refinancing your loan into a 30 year fixed or 15 year fixed,  protects you from an increase in future interest rates and takes advantage of the  current low interest rate environment.
Having a low fixed rate mortgage will help you avoid financial trouble before it  begins, and the worry and stress that comes with the uncertainty of an adjustable  rate loan adjusting to a payment you cannot afford.

3. Reducing Your Total Interest Costs With A Shorter Term

 Refinancing to a shorter-term, such as a 15 year loan, can save thousands of dollars over the long-term. Refinancing your home to help pay off your loan faster could increase your payment, so be careful about taking on a payment that could be difficult to afford. Another option to ask your lender about, are bi-weekly payment options, which pay your loan balance down faster.

4. Cash Out Refinance – Accessing The Equity In Your Home to Use For Other Purposes

Some examples include:
• combining a first mortgage and a home-equity loan or 2nd mortgage into one  new lower interest rate mortgage
• making home improvements – kitchen, bath, pool
• paying for college
• consolidating credit card debt with a higher interest rate

5. Refinancing as a Sound Business Decision

If you own a small business and need a capital infusion, refinancing might be a good idea in the situation. Refinancing your home could be what you need to increase capital reserves to plan for future investments.

Refinancing a home loan is something that happens all the time, on average about every five years or so.

Making sure your credit history and credit score are in the best possible shape will help you get the best mortgage rate.

Know what your goals are and make sure you find the mortgage lender with experience, who can help you determine if refinancing now is right for you.

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By: Jackie Barikhan
NMLS #914312
Mortgage professional since 1995 who helps homeowners make sound mortgage decisions.