Should You Refinance Your Home Now or Wait?
If you are offered an interest rate 1 to 2% lower than what you are currently
paying on your mortgage, it is worth your while to refinance. Refinancing a
great option if you are looking to decrease your monthly mortgage payment, move
from an adjustable rate to a fixed rate or if you just need some extra cash.
Because average mortgage interest rates are fairly low right now, it is an
excellent time to refinance your home.
How does refinancing work?
Refinancing is the process of paying off your current mortgage and replacing it
with a new one. If you refinance at a lower interest rate, your monthly payments
will be lower, allowing you to use the extra funds for other expenses.
Consider this example: If you bought your home at a 12% interest rate and
borrowed $200,000 for a 30-year fixed rate mortgage, your current payments are
approximately $2057 per month. At today's lower rates those payments can be cut
to $1279 per month. That's a savings of more than $778 a month! In this
scenario, even if you could refinance at an 8% interest rate, you would still
cut your payments by $590 a month.
However, you should realize that you’ll probably have to pay some up-front
refinancing costs, which can range from $1,000 to $3,000. You must also be able
to prove that you have a steady income and some equity in your home in order to
refinance.
But refinancing will be more than worth the up-front fees and extra effort in
the long run. After a few months, you'll realize the savings on your new
mortgage, and you can use the extra money however you want. You may choose to
pay off other loans or credit card debt, buy a car or save the money for your
child’s college education.
The countless advantages of refinancing
Refinancing offers numerous advantages, the most obvious being a lower
monthly mortgage payment. However, refinancing provides homeowners with many
other savings opportunities, as well.
For example, you could move from an adjustable rate to a fixed rate mortgage.
Because a fixed-rate mortgage protects homeowners from sudden interest rate
increases, this type of mortgage could save you incalculable amounts of money in
the long-run.
You could also switch from a 30-year mortgage to a 15-year mortgage. By doing
so, you'll pay off the principle on your home much faster and save thousands of
dollars in interest rates over the years.
Refinancing also allows you tap into the equity of your home for extra funds
to put towards much needed home repairs or improvements, college tuition or even
to pay off debt.
No matter how you choose to use the savings from your lowered house payments,
you will greatly benefit from refinancing your home. Don't wait any longer to
refinance your home. Find out how iCreditCentral can help you lower your monthly
mortgage payment and reap the benefits of refinancing today.
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