Are you thinking about refinancing your home? If so, you’re not alone. Many homeowners are choosing to replace their current mortgage with a new home loan, often with a more attractive rate or shorter term. Refinancing can be a great way to save money on your mortgage payments and improve your overall financial situation, especially if you plan to stay in your home for a while.
There are many reasons to refinance, whether you want to lower your monthly payment, shorten the life of your loan, or consolidate other debts with a cash-out refi. If you’re wondering if the time is right to refinance your home, look for these signs:
You have a better credit score
Has your credit score improved since you first got your mortgage? If so, you may be able to secure a better rate with a refinanced home loan. Lenders use your credit score to evaluate your financial responsibility and determine the interest rate on your loan. With a higher credit score, lenders may offer you a more attractive rate on a refinanced home loan, which can help you save money over the life of your loan.
Your income has increased
Lenders also look at your debt-to-income ratio when determining the interest rate on your mortgage loan. If you’ve had a substantial boost in income since getting your first mortgage, now may be an ideal time to consider refinancing to a shorter loan term. With extra income, you may be able to pay off your loan sooner, which may save your thousands of dollars in interest.
You want to pay off your loan sooner
One way to save money over the life of your loan is by shortening the term of your mortgage loan with a refinance. Most homebuyers get a 30-year mortgage, but a 15-year mortgage may help you save money by lowering your interest rate. When you restructure your loan to a shorter term, you’ll pay more for your monthly payment, but you’ll end up saving more money in the long run in interest and build equity in your home faster.
You want to do home renovations
Is your home in need of renovations, repairs, or updates? Maybe you want to remodel your kitchen or replace the carpet in your home. Renovations can improve home safety and increase the value of your home, making it more attractive to buyers if plan on selling it. One way to cover the costs of home renovations is with a mortgage refinance. Refinancing to a lower rate loan can lower your monthly mortgage payments and free up extra cash for renovations – or any other financial goal. Or, you can borrow against the equity in your home with a “cash-out” loan to gain access to cash reserves at a low, tax-deductible rate.
You want to consolidate other debts
Some homeowners use refinancing to tap into their home’s equity and consolidate high-interest rate debt. Consolidating debt with a mortgage refinance allows homeowners to simplify their monthly payments, making just one payment each month instead of several. Paying down high-interest debts faster can also help to improve your credit score. And unlike credit card interest, mortgage debt is tax deductible in most cases.
You don’t like your current lender
It’s an unfortunate fact that some mortgage lenders aren’t out for their clients’ best interests. If you’re uncomfortable or unhappy with your current mortgage lender, you don’t have to stay with them! Refinancing is an opportunity to start fresh with a mortgage lender you trust.
Whatever your personal reason for refinancing, the experts at River City Mortgage have the resources, knowledge, and experience to help you save money and reach your personal goals. Your comfort level matters to us; we’ll take the time to talk about your needs and goals to ensure you understand all the details and enjoy a smooth and hassle-free experience. Let us see if we can improve your mortgage payment by refinancing! To learn more and receive a free home refinance quote, contact us today!
