Have you asked yourself, “Should I refinance my mortgage? Or how about, when should I refinance?”
It is not uncommon for people who don’t know a lot about buying a house — particularly the financial aspects — to find themselves saddled with a home mortgage that has high interest rates with even higher monthly payments.
This may be because they weren’t diligent or just didn’t know to pay attention to the interest rates, which may have been too high at the time of purchase.
Interest rates have dropped and remained low for quite a while, and those who previously applied for a home mortgage when the rates were high, are left paying their home loans at interest rates higher than even 6%.
That is why, if you get an opportunity to refinance your home mortgage, seek home mortgage refinancing help and advice to give you a concrete idea whether to refinance your home purchase loan or keep it as is until you have fully paid it.
There are many reasons why people refinance their home mortgage. Maybe they need to have lower payments because their monthly income isn’t what it used to be, or maybe just because they want to remodel their home, make a big purchase or go on a vacation. Whatever the reason, one common goal for is to make their mortgage loans more financially agreeable, and easier to pay, compared to the current, existing one.
Should you refinance your mortgage?
While home mortgage refinancing can have several benefits for those seeking home purchase loans, it isn’t always applicable to everyone.
To give an overview whether you should refinance your home mortgage or not, the brief discussion below will help you garner a better idea on whether it is the best option for your current existing home purchase loan.
To refinance a home mortgage is to repay the current existing home purchase loan and replace it with a new and easier to pay one.
When you decide to get a home mortgage refinancing loan, make sure you get a win-win deal. There can be times when you get a mortgage refinancing loan where there isn’t much of a difference compared to your current home purchase loan. Or worse, your new mortgage refinancing makes you pay more than your current home mortgage. In that case, refinancing brings you more trouble instead of help.
One factor refinancing your home mortgage greatly helps, is if your new mortgage offers you a lower interest rate than your current home purchase loan. For example, if your current home mortgage is at a 6% interest and you can refinance it at a 5% interest, that would make a big difference long term, and it makes your payment smaller and easier to afford.
By tradition, it is recommended you get a home mortgage refinancing loan if it gives you at least 1% reduction in the interest rate. That means when the interest rate of the refinancing is at least 1% lower than your current interest rate, just like the example above, it is a good time to have your home mortgage refinanced.
However, over time, many have been applying for a mortgage refinancing even when they only save less than 1% reduction.
Though less than 1% interest reduction still saves you money, there isn’t enough of a difference compared to when you wait until you find a mortgage refinancing which reduces your current interest rate at least 1%.
Refinancing your home mortgage with a lower than a 1% reduction in interest rate may be a personal decision. However, making a wiser decision gives you better opportunities in the future.
The interest reduction rate may also be relative to your current interest rate. For example, if your current interest is at 7%, it would be wiser to get refinancing that reduces your interest to 5%. When your current interest is at 5%, getting a refinancing of a 4% interest would save you.
Aside from helping you save money on interest payments, a reduced interest also helps increase the rate of building your home equity. You may then use this home equity in the future to cover expenses that require an ample amount of cash, such as a college education for your child, a vacation, or for home improvements.
Aside from the reduction of interest rate, refinancing your home mortgage should also help you shorten the payment term of your home purchase loans.
Usually, when the interest rates fall, you have the opportunity to get refinancing on your existing home purchase loan to significantly shorten your payment terms. This is especially applicable for those who can get higher interest reduction from their existing home mortgages.
For example, a homeowner who’s paying 9% interest on a 30-year home purchase loan gets refinancing with 5% interest. With only a very minimal change in the monthly payment, the owner can shorten the payment term from 30 years down to 15 years. With lower interest rates and shorter payment term, the burden of paying the mortgage is significantly less.
Another reason to refinance your home mortgage is for you to switch from an adjustable rate mortgage or ARM to a fixed rate mortgage.
To protect you from having to worry about paying more in rising interest rates, it would be better that you refinance your home mortgage from ARM to a fixed rate interest.
Lower monthly payments, on the other hand, may not be that much of a necessary factor, but getting one would greatly benefit you. Sometimes there are some mortgage refinancing opportunities that offer you lower monthly rates on your home mortgage, which makes your refinancing even better.
Typically, you would want to refinance to ease the payment of your home purchase loans.
One of the best times to refinance your home mortgage is when the interest rates are significantly lower than your current one.
Interest rates are the biggest factors when getting home refinancing, as they may also affect your monthly payments, payment term period, and home equity.
When your interest rates are significantly reduced such that it reduces your mortgage payment, shortens the term of a loan, and helps build equity faster, that is the ideal best time to refinance your home mortgage. It is highly important you get the best deal when it comes to refinancing your home purchase loan.
Not all homeowners have the chance to get all the privileges when applying for a home mortgage refinancing. If you are not yet familiar with loans and refinancing, it is better you ask for home mortgage refinancing help and advice from experts.
This helps you get the best possible deal for your mortgage refinancing, and avoid having to waste time and effort of getting a mortgage refinance that isn’t that much difference to your current home purchase loan.
Seeking advice from mortgage refinance experts also helps you find low-cost home mortgage refinancing, which is what most homeowners want to have.
When you want to refinance your home mortgage, make sure you get the best deal you can.
If you want to make sure to get a low-cost home mortgage refinancing, go to Peak Home Loans.
At Peak Home Loans, they give you mortgage refinancing help and advice before refinancing your mortgage.
Based on your loan condition and financial situation, they’ll find a home mortgage refinancing helpful to you, and they can find you the best home mortgage refinancing deal for you.
Do you need low-cost refinancing for your home mortgage?
Peak Home Loans can offer you a monthly payment as low as $435 with a fixed rate of only 3.25% on a $100,000 home mortgage refinancing or home purchase loan.
With home mortgage refinancing that offers you this low a cost, you can own a house with less stress, knowing you will have low monthly payments. You are also assured your payment interest remains low, even when interest rates rise.
This gives you security from your monthly financial obligations knowing for the rest of your payment term, there is no chance for your monthly payments to rise.
Be sure to get the best deals when you apply for home mortgage refinancing.
Check for opportunities that you can get on deals the lending institution can offer you. More importantly, ask for expert advice so as to help you weigh all the pros and cons of home refinancing. Not all loans perfectly fit everyone, so get advice from those who have years of experience in providing better home mortgages.
With Peak Home Loans, you can get the best home mortgage refinancing deals that will make your home mortgage become easier to pay with less hassle, giving you more room to breathe from all your financial obligations.
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