Obtaining a mortgage isn’t the end of financial decisions when purchasing a home. After some time, it may be a good idea to start thinking about refinancing the mortgage. This can be done for a number of reasons and can lead to a faster payoff or lower payments, saving the homeowner quite a bit of money. Some of the most common times to consider refinancing include the following.
Significant Increase in Income
If the homeowner has received a raise that significantly increases their income, it may be worth considering a refinance to alter the monthly payments. Since the homeowner can afford to pay more each month, they may want to switch from a 30-year loan to a 15-year loan or another shorter option. Though the payments will likely increase, this could mean the home is paid off a lot faster, which can help them save on interest in the long run.
Need to Reduce Payments
There may be times when a homeowner will want to look into reduced payments so they have more money to spend on other expenses throughout the month. A refinance to reduce payments can be done at any time, but it is important to look around for the right loan. The amount of interest rates at the time as well as the current amount of equity can make a difference in how low the payments might be, and if they’re not lowered enough, it may not be worth refinancing quite yet.
Interest Rates are Lower
When interest rates drop significantly, it’s a good time to consider a refinance. Right now, interest rates are historically low, so it’s a great time to think about doing a refinance. Even if the homeowner doesn’t need to lower the payments at that time, refinancing can help them save a ton of money over the life of the mortgage. This money can be used elsewhere or put into savings, so if the homeowner has an emergency, they don’t have to worry about missing a month or two of payments.
Time to Find a Better Lender
If the homeowner isn’t happy with their current lender, it’s time to refinance. It’s common for some larger lenders to write the mortgage, then sell it to a smaller company. If the homeowner doesn’t like the new company or has any issues with them, refinancing with a different lender is a good idea. It is possible that the homeowner could get a better deal by finding the right company to work with, so this is another time the homeowner may be able to save money.
If you’re interested in lowering your payments or paying off your home faster, refinancing might be a good idea, especially while the interest rates are incredibly low. It’s possible you will be able to save a significant amount of money over the life of the mortgage. Take the time to learn more about how to refinance your housing loans with Dollarback Mortgage to find out the options available to you and to see if this is something you’d like to do.