This past year has produced new opportunities for people due to the fluctuations within the economy. One of the trends that appeared was refinancing your home courtesy of the record-low interest rates. The process of refinancing your home can be confusing to understand, which may leave you questioning whether you should join in the trend or not.
At The Reichert Mortgage Team, one of our specialties is refinancing opportunities for the folks of the Colorado Springs community. Our top mortgage brokers are here to guide you through all the questions that you may have as a homeowner, including, “Should I refinance my home?” Our goal is to guide you through all of your home loan and refinancing options so that you can feel confident in your decisions.
What is Home Refinancing?
Refinancing your home is the process of trading in your old mortgage for a new one. When you refinance your home, your lender pays off your old mortgage with your new mortgage. Basically, you receive a new mortgage by changing the terms of your current mortgage. If you’re interested in refinancing, you’ll compare interest rates and contract terms with your existing loan. The process mirrors that of applying for an initial home loan.
Home Refinancing And COVID-19
During the unique times of Coronavirus, the housing market saw historically-low interest rates. These low interest rates were introduced in an effort to provide support to the national economy. For some people, these interest rates presented the perfect opportunity to seek out a lower mortgage rate, a shorter mortgage term, or both.
Should I Refinance My Home?
Debating whether you are a candidate for refinancing your home can be an arduous process. There are a few questions you should ask yourself to help guide your decision-making.
1. How long am I going to stay in my home?
If you’re going to refinance your home, you want to make sure that you’re going to be living there long enough to reap the savings benefits of a lower interest rate.
2. What is the length of my mortgage?
If your current mortgage is 30 years or longer, refinancing is a great way to lock in a 15 year mortgage. A 15 year fixed-rate mortgage is ideal. With this type of mortgage, your interest rate is locked in and cannot change. You’ll be responsible for paying the same amount every month, unless you choose to pay more. Shorter terms mean less interest rates because it’s less of a gamble for the lender. With longer terms, the risk of not being repaid increases.
3. Do I have a forbearance?
Due to the hardships that COVID-19 has placed on families, many banks are giving their customers a forbearance. In some cases, this means that mortgage payments are delayed for a certain period of time. The homeowner will still be responsible for the amount owed, but they don’t have to currently pay and can use their money for other essential needs.
If you received a forbearance because external circumstances affected your ability to pay your mortgage, then refinancing your home is probably not a good option for you. Yes, you may receive a lower interest rate, but you’ll most likely be required to start making your mortgage payments immediately. You have to remember to weigh the money you would save against the cost of refinancing your home.
Simplifying Home Refinancing | The Reichert Mortgage Team
Refinancing your home has gained popularity during COVID-19. But, you have to make sure that you thoroughly take a look at your financials to determine if refinancing is the right decision for you. The Reichert Mortgage Team consists of passionate mortgage brokers that are eager to help you with all of your mortgage refinancing needs.
Whether you’re unsure of how to determine if you’re a good candidate for refinancing, or want our opinion on your potential new mortgage, we are here to help make the process as simple as possible! Schedule an appointment with one of our mortgage professionals today!