The decision to refinance your home is larger than you may think, so to make the right decision, there are a lot of factors that must be looked at. When refinancing a home, you are deciding to take your current home loan and exchange it for a new one. Being a mortgage broker in Colorado Springs, The Reichert Mortgage Team specializes in refinancing home loans and we are proud to have helped many homeowners through this complex, and often beneficial process. However, refinancing may not be the right decision for everyone. We prioritize your wants and needs above all else, and that means working diligently to ensure that a refinance is right for you. If you are looking for the benefits of refinancing your home, we have some reasons that will help steer you in the right direction.
1. Home Renovations
As a company that finds the best mortgage loan financing options for homeowners, we know that there are many reasons why you may be thinking about refinancing your home. When refinancing your home, the money has the potential to go towards home renovations. There is a multitude of things that you may want to use the money to help fix up your beautiful home. Home renovations can range from added rooms, bigger yards, or maybe even a swimming pool. We are dedicated to helping you make your house into a home in any way possible and refinancing it is a great place to start.
2. Lower Interest Rate
If you have the chance to make your interest rate lower, then wouldn’t you want to do it? Obtaining a lower interest rate on your mortgage is a great reason to refinance your home. This process can take some time to get approved, but it is a possibility, especially with a good mortgage lender on your side. You can refinance and receive a smaller interest rate which will allow your money to go towards paying off your home quicker and not paying as much in interest in the long run.
3. Pay Off Your Mortgage Sooner
Paying off your mortgage sooner ultimately allows you to pay less than you would have if you went the whole time. Here at The Reichert Mortgage Team, we give you the chance to refinance your home to lessen the time you are given to pay but remember to consult with a trustworthy lender during this process to see what other things may be affected. This is something that should only be done if you are in a financially stable situation. For example, if you had a 30-year loan, and you have been paying for 5 years, then you might be able to refinance to a 15-year loan. In addition to shortening your mortgage loan term, your interest rate might decrease as well, saving you money in the long run. If you are interested in an early payoff try out our Early Payoff Calculator and contact us today.
4. Lower Monthly Payment
When you refinance your home, one thing that may be offered is the ability to lower your monthly loan payments, by extending your loan term. Lengthening the term of your loan can often spread out the amount you owe, thereby lowering your monthly cost. Remember that while this may help the money that is currently in your bank, it will mean you pay more by the time you are done, due to the interest that accumulates over time. We work hard at The Reichert Mortgage Team to make sure that you achieve your goals when it comes to refinancing your home. If that means lengthening your loan to pay less, monthly, then we will work to make it happen. Unlike paying off your loan early this is commonly done for homeowners under financial distress. If this is you it is important to make sure that you speak with a qualified professional as soon as possible. A good mortgage broker will assist you in reducing your mortgage payment to a manageable level so that you do not default and lose your home.
5. Consolidating Debt
When there are many things to pay for, our monthly bills tend to become overwhelming and hard to keep track of. Refinancing is a great way to fix this problem and maybe even save you money in the long run. Refinancing gives you the ability to refinance and turn several monthly payments into one monthly payment. Consolidating debt helps with high debt individuals that want an easier way to make their payments as well as those who would like to refinance to take cash out and help pay off things like credit card debt. Consolidating debt should only be used for individuals who are in major amounts of debt who should talk to a specialist to make sure the interest rate will be lowered significantly.
6. Changing From Fixed Rate Mortgage To Variable
When considering refinancing it is also important to examine how your current home loan is structured. Do you have a fixed-rate mortgage or a variable rate? What are those and what do they mean? For a full explanation and detailed comparison visit A Quick Guide to Fixed Rate Mortgages. However, they are fairly basic. A fixed-rate mortgage means that you will pay a fixed interest rate throughout the loan, where a variable rate will go up or down based on the market. This is important to consider because sometimes rates are high and sometimes they are low. If you currently have a variable rate and interest rates are low you could refinance to lock in a lower interest rate. However on the flip side if you hold a lower interest rate that is fixed refinancing may not be in your best interest.
7. Home Equity
We are all aware that life is not always sunshine and rainbows. Therefore it is common for homeowners to find themselves in need of liquid cash to pay for emergencies. If you have owned your home for a few years you have earned some equity in it. Refinancing can provide an avenue to remove some of your equity and borrow your own money.
8. Save For A Home
In some cases refinancing your current home at a lower rate will allow you the financial freedom to save for your next home. Maybe your home has grown a little more than you expected and you foresee yourself searching for a new one soon. Adjusting your loan now could provide some liquid cash for a down payment or closing costs in the future.
9. Take Advantage Of No-Cost Refinancing
From time to time lenders will offer no-cost refinancing options. This is usually the best time to refinance because there will be no additional closing costs or fees besides taxes. Banks and lenders tend to do this occasionally to help circulate money throughout the economy, rather than your money being tied up in an expensive mortgage payment and closing costs you can spend. This stimulates the economy and improves it.
10. Eliminate Mortgage Insurance
One of the most popular reasons to refinance is to eliminate mortgage insurance. Private mortgage insurance or PMI is monthly insurance paid to cover the lender’s asset if the homeowner defaults on their payments. Typically homeowners will be required to pay mortgage insurance because they could not put 20% down as a down payment. However, refinancing can adjust your mortgage and eliminate the need for a PMI. Learn more about PMI’s by reading PMI Vs. MIP.
How Often Can You Refinance Your Home
You can refinance your home as often as you would like. However, we do not recommend it because it can be costly and time-consuming. In most cases, once you refinance you should be set for the remainder of the loan. A good mortgage broker will fight hard to find a mortgage solution that fits your specific needs and wants.
Looking to Refinance? Contact The Reichert Mortgage Team
The number one rule to remember when refinancing your home is to ask the question of why you want to do it. Are you trying to save money? Extend your term? Lower your interest rate? All of these are valid reasons to refinance your home. Here, at The Reichert Mortgage Team, we put your needs above our own. We want what is best for you, in your unique situation. We help you align your objectives and achieve your homeownership goals. When you are figuring out if refinancing is the right thing for you, we can be the objective, subject matter expert. Contact us to make sure that you are refinancing and getting the most out of your home. At the end of the day, we want you to be happy and comfortable with your decision to refinance.