Refinancing is when you get a new mortgage to replace your current one. The most popular purpose of refinancing is to lower your interest rate. But you might be surprised – there’s several reasons why it would be wise to refinance your mortgage in Redding, California.
Refinance to Shorten the Term of Your Loan
If you have a 30-year mortgage, now is a great time to consider refinancing. You may find that a 15-year mortgage isn’t actually that much more expensive than the 30-year loan payment you have been paying.
For example, if you went from a 30-year mortgage at 5 percent to a 15-year mortgage at 3.25 percent, your payment could only increase by about $200. Since that often easily fits into someone’s budget, the decision is a no-brainer. You’ll be building equity faster and shortening the length of your loan.
Start by entering your information into a mortgage calculator to see what your new payment might be. If your new estimated payment is feasible, consider setting up a consultation with a loan officer.
Refinance to Lower Your Interest Rate
Right now, interest rates are low. If your home was previously financed at a higher rate it’s a great time for you to consider refinancing. Of course, refinancing isn’t free – but you should think of this like an investment. If you can cover the fees now, a lower rate could literally save thousands of dollars in the long run.
It’s a great idea to sit down and crunch numbers that are personal to your situation, so you can see exactly how much you would save by refinancing your mortgage in California. It’s your money. Spend it wisely.
Refinance to Lower Your Payment
If refinancing lowers your interest rate, but you want to keep the same term length of your loan, this means you’ll have a lower monthly payment. And even if you already have a low interest rate, you could move to a 30-year loan to lower your payment.
Either way frees up your capital. You can add more into savings, use it to renovate your home, or invest it elsewhere. Although refinancing to lower your payment could increase the term of your loan, it makes sense if you have other financial opportunities.
Refinance from an Adjustable-Rate to a Fixed-Rate Loan
If you currently have an adjustable-rate mortgage, there’s some perks of having a fixed-rate loan. The main benefit is stability. While the adjustable-rate loan’s monthly payments can fluctuate, the principal and interest will stay the same throughout the life of a fixed-rate loan. This makes it easier to set your monthly budget, and also gives you peace of mind of knowing how much you are going to pay.
Refinance to Cash Out Home Equity
It’s a tempting proposition to cash out your home equity by refinancing your home. Similar to refinancing to lower your payment, it could even be a great financial move in some circumstances. For instance, it may make sense to cash out some of your home equity in order to buy an investment property or start a business. Keep your financial goals in mind and take the necessary steps to get there.
The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.
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