Why Refinance Your Current Home Loan?
Refinancing your home is a great option for a variety of reasons, but some of the most common include:
Shortening the term of your loan
The sooner you pay off your loan the less interest you pay. Shortening your loan term can help you re-evaluate your current mortgage and put you on schedule to pay your loan off quicker.
Lowering your interest rate
This is often the most common reason (in recent years) that our clients have refinanced. Lowering your interest rate will lower the amount of interest you pay over the life of the loan and, in some cases, reduce your monthly payment.
Lowering your payment
Who doesn’t want a lower payment? Whether you end up changing loan programs, changing the loan term, lowering the interest rate etc. lowering your payment is also a common reason for mortgage refinances.
Changing from an ARM to a fixed rate mortgage
If the low-interest time frame on your adjustable rate mortgage (ARM) is about to expire, you may want to consider refinancing if current rates are lower than the stated rate on your current loan program. It will save you money in the long-term.
Cashing out your home equity
Refinancing can be a great opportunity if you need to pull some of the current money you’ve put into your house out and re-apply it elsewhere in your life. Cash-out refinances are possible in today’s market.
Discontinuing mortgage insurance
In some cases, refinancing may help you remove mortgage insurance from your monthly payment.
Debunking Home Refinancing Myths
What perceptions might be keeping you from saving money on your mortgage?
“I’ve read that the rate needs to be 1% or 2% lower than my current one for a refinance to be worthwhile.”
In the past, when mortgage amounts were much less than they are today, this statement was true. Now, with loan amounts creeping higher each year even a small change in your rate can make a huge difference over the life of your loan.
“I haven’t reached the break-even point from my last home refinance.”
That may be ok. If you refinance again there will be an additional investment, however the new break-even point may provide you even greater savings, more quickly than your current loan.
“I don’t want to add years back onto my loan.”
Did you know that your loan term can be whatever you want it to be? Just because a loan says 30 years doesn’t mean you can’t pay it off much sooner than that. If lowering your rate or changing loan programs saves you a couple hundred dollars a month, it will actually reduce your balance more quickly and allow you to pay off your loan even faster.
“It’s too expensive. I’d rather just save my money.”
In most cases, refinances are all about saving money (not spending more money). Make sure you take a look at the savings you would receive over the life of the loan rather than just looking at the upfront cost. Often times, your savings will far eclipse your out-of-pocket costs.
Cherry Creek Mortgage Co., Inc. NMLS #3001. An equal housing opportunity lender. NMLS #493951. All Rights Reserved. Some loan products may not be available in all states. Terms, rates, and fees subject to change. Please speak with one of our loan originators for more detail.