With mortgage rates at historic lows, you may be thinking about refinancing you mortgage. Is now a good time? Refinancing a mortgage is essentially paying off the remaining balance on an existing home loan and then taking out a new mortgage on the same home, often at a lower interest rate. It may sound like a no-brainer, but there are many factors to consider.
Two reasons a refinance might be right for you:
1. Your credit is strong and you’d like to lower your monthly payments -The current mortgage rate environment makes this an excellent time to refinance with a lower interest rate. If your credit is strong, a refinance can save you hundreds of dollars on your monthly payments.
2. You’d like to shorten the life of your loan - If you have a mortgage with a high interest rate, but you can easily meet these payments, consider refinancing to a shorter-term loan. You may be able to pay off your loan in half the time without changing your monthly payment much.
When refinancing your mortgage is a bad idea:
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