Is Now a Good Time to Refinance my Mortgage? Figure Out Reason First

Your biggest yet essential investment can be a mortgage. After all, the loan you are seeking must have a higher purpose. But do you know about refinancing? It’s a great move by the financial institutes that is not beneficial for them but also for the borrowers. In simple terms, mortgage refinances replace the existing mortgage (s) with a new mortgage. However, there are different types of refinancing, and you can opt for the one which meets your goals. But the question is, is now a good time to refinance my mortgage

The question will be clear only when you know the purpose of seeking the loan. So, below I will walk you through some reasons that give you a better understanding of is it a good time to refinance or not. 

When Changing the Loan Term 

Homeowners have several reasons to go for refinancing when changing the loan term. However, it could be a shorter or longer mortgage term. Homeowners usually go on a longer loan term when they find it challenging to make monthly payments. This reduces the payment and makes it easy for them. On the other hand, the short loan term is for the ones who quickly want to make the payment and don’t want to extend the period of interest rate. But this can only be done when the financial status is strong. 

When You Want to Pay off Debts 

When you make monthly payments, then you start earning the equity. It’s the difference between the current market value of the home and the amount the lender still owes to the borrower. Equity can be raised in two ways: one by paying off the loan principal, and another when the value of the home rises. 

Look for the cash-out refinance to avail of the benefit of equity and replace the existing loan with a higher value loan. The opinion is productive to meet other debts spread over multiple accounts as cash-out-refinance reduces the interest rates.  

When You’re Planning to do Home Improvements

Here, again cash-out-refinance comes in handy as the borrower can seek the advantage of low-interest rates. So, one can use the equity from the refinance option and use the money for the home renovation, rather than looking for one more personal loan. Plus, you can use the free home refinance calculator available on the Preferred Rate official website to figure out which works best in your case. 

When You Desire a Big Retirement Saving

Every person aims to have big retirement savings to live a peaceful life when not working. It’s good if equity sits in your home as time to go for cash-out-refinance. The money can be put into retirement savings. 

When You Want to Convert an ARM to a Fixed-Rate Mortgage

ARM stands for an adjustable-rate mortgage that offers a lower interest rate at the starting of the loan. But once the fixed rate is crossed, there is the potential of the rate to fluctuate and may not favor borrowers’ financial needs. This is one of the core reasons that homeowners convert an ARM to a fixed-rate mortgage to avoid fluctuation of rates.  

So, now you have a clear picture of the reasons for choosing the refinance option, then you can make the right decision whether to go for it or not.

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