There are two major reasons to look at refinancing your mortgage. The first reason is to lower your interest rate and maybe the term of your mortgage. The second reason is looking at using the equity in your home to do a cash out refinance.
Should you shorten the term of your mortgage or lower the payment? As mortgage rates start to come down, many people will look at doing a rate term refinance and need to decide what makes more sense. The answer to that question is to think about your own situation and what your goals are. For some, retirement may be close and you want to plan getting your mortgage paid off before you retire. For others, it may be more important to lower your payment so you can free up money to do other things. It may be paying off other debt or using the extra money to build a savings account. One suggestion I give many people is to think about maybe going to a 20 year instead of a 15 year mortgage. It will pay off your loan faster but also give you a little more money every month. The other option is to stay with the 30 year mortgage but put extra towards the principal every month. That way if something happens and you need the money for an emergency, you can easily use it by just making your regular payment.
The second question is do you want to take cash out of your mortgage? There are many people right now that have used credit cards and may want to look at taking some equity from your home to pay off the credit cards. Typically the credit card interest is in the mid 20% range so paying off the cards may make sense. Some people want to make some updates to their homes, using equity from your home may be a great way to pay for those updates. There are two ways to pull equity from your home. You can look at a cash out refinance or a home equity loan. A cash out refi may make more sense if a refinance lowers your rate. A home equity loan is usually an adjustable rate loan that you can use over and over again. Talking to your loan officer will help you make the best decision on which way to go.
When clients talk to me about a refinance, we look at all options. Right now rates are just starting to drop, so you may want to wait a bit – but we never know for sure what will happen with rates. I will go through your options and make sure it makes sense to you. There are times I tell clients to wait and explain why. I want to make sure we help you meet your goals. If you are thinking about a refinance, feel free to reach out and we can talk about your options!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
