For most Americans, your mortgage payment each month is a large part of your salary. With record low interest rates, now can be a great time for you to refinance your current mortgage. Refinancing has the potential to help you meet your goals of paying off your current mortgage sooner than anticipated. There are in fact many benefits to refinancing; however, it is important to do your research to know if it is the right option for you. Here are three reasons you should refinance when interest rates are low.
Shorten the Terms of Your Loan
If you’re considering refinancing, it could cut your time of paying off your mortgage in half. With record-low interest rates, a 30-year payment is only slightly less expensive than a 15-year mortgage payment. Adding a small amount to your mortgage payment each month could have you paying it off 100% in a considerably less amount of time; therefore, saving you money on interest expenses.
Lower Your Current Payment
On the other hand, refinancing your home can be a huge benefit by cutting your payments in half if your goal is flexible and you have more time to pay it off. This isn’t ideal in some situations, so it is important to recognize what your individual goals are. The lower payment each month can save you hundreds, even thousands, of dollars in the long run for you to save or invest elsewhere. Additionally, you have the potential to save thousands on interest.
Refinance From an Adjustable Rate Mortgage to a Fixed Rate Loan
Refinancing your loan from an adjustable rate mortgage to a fixed rate loan can save you a considerable amount of money in the coming years. With the current low interest rates, locking into a fixed rate loan can protect you from the rising interest rates that are inevitable in the next few years. Furthermore, having a fixed rate loan can make it easy for you to plan and maintain a budget.
Right now, in the current market, is a great time to consider refinancing your loan. Complete research and insert your personal information into a mortgage calculator to determine if a different payment amount each month works in your current situation. For more information about the risks and benefits of refinancing your home, visit here.
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