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Consider This: When to Refinance

Dated: May 8 2023

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 Refinancing your mortgage is something most homeowners consider at least once throughout the
 lifespan of their home loan. It allows you to pay off your previous loan by applying for a new one
 that has better financial advantages. While there are many good reasons to refinance, here are five
 common ones.

  • Scoring a lower interest rate. The number one reason homeowners decide to refinance is to
    secure a lower interest rate on their mortgage. Not only does this save you money in the long
    run and decrease your monthly payment, but you can start building equity in your home sooner.
  • Using an improved credit score. Even if interest rates have not dropped in the market, if you’ve
    improved your credit score over the last few years, you may be able to reduce your mortgage
  • Shortening the loan’s term. If interest rates are decreasing, there is a chance you may be able to get a shorter loan term with little to no change in your monthly payment, allowing you to pay off your loan
  • Switching from an adjustable rate to a fixed rate. If you chose an adjustable-rate mortgage with
    great introductory rates when you initially financed your home, that rate may increase significantly
    over the years. By switching to a fixed rate while interest rates are low, you can protect
    yourself from future increases.
  • Cashing out home equity. If there is a big purchase or payment on the horizon, such as funding
    a wedding or going back to school, your best option may be to use the equity you’ve built in
    your home to borrow money at a lower cost.
Blog author image

Marilyn Johnson

As a realtor who has lived in the area for over twenty years, I bring a wealth of knowledge and expertise about buying and selling real estate here. Properties are not the same everywhere, so you need....

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