There are several reasons to refinance your mortgage. We will be discussing the top three of these reasons in today’s advice column.
The first way is to lower your interest rate. Interest rates vary from year to year and sometimes even from month to month by a great deal. It may be that rates were higher at the time you started your 30 year loan. If rates go down low enough it may be worth the effort to refinance under the new rates. This can be a very enticing reason to get a refinance mortgage.
The next way is to get a lower monthly payment. Perhaps you have 15 years worth of payments on your 30 year mortgage but your payments are too high. You could refinance your home for a new 30 year loan for the current amount due and this would reduce your monthly payments. This option should only be considered with caution as although your monthly payments go down the total amount you must pay over the life of the loan is dramatically increased.
Finally, there is the option to get out from under a variable interest rate loan. There are quite a few borrowers who got a loan of this type as they were typically easier to get during the housing bubble. They can be very expensive and more importantly, unpredictable. Your home loan payment should be something you can count on to remain the same (or go down) but never up. Refinancing out a variable interest rate loan can be great for your peace of mind and your pocket book as well. This rounds out our list of the three top reasons to get a mortgage refinanced.