Every homebuyer wants a low mortgage par rate because it can save them hundreds of…
Refinancing your mortgage is the best way for you to use your home as a financial tool to leverage your investment. Refinancing a mortgage means paying off your existing mortgage and replacing it with a new mortgage. You will go through the same process you went through when you got your first mortgage. This process involves filling out an application, verifying your financial information and credit, having a title search, and getting an appraisal.
Today may be the best time for you to refinance your mortgage. Here are a few reasons why refinancing your mortgage can be an excellent option to improve your financial situation.
Lower Monthly Payments
One of the most significant benefits of refinancing your home mortgage is getting a lower interest rate. Interest rates constantly change. Therefore, it can be a great time to refinance your mortgage if the interest rate is lower now than your original mortgage. A general rule is to refinance your mortgage if you can reduce your interest rate by one or two percentage points. A lower interest rate can improve your financial situation by reducing your monthly payment and saving you money on mortgage interest.
Convert an Adjustable-Rate Mortgage to a Fixed Rate Mortgage
You may have chosen an ARM when you bought your home because it had a lower interest rate than a fixed-rate mortgage. Unfortunately, the interest rate on an ARM periodically adjusts and can result in a high-interest rate. You can end up with a higher interest rate with an ARM than with a fixed-rate mortgage. Refinancing to a fixed-rate mortgage can provide you with a lower interest rate and eliminate the concern over future interest rate hikes.
You can also convert a fixed-rate mortgage to an ARM if your interest is lower than your current fixed-rate mortgage. However, the interest rate on an ARM can adjust upward in three to five years.
Take Cash Out
Home values across America have increased in value over the past several years. You may have considerable equity if you purchased your home down payment and have lived in it for several years. Equity is the amount of money you have in your home to take out. The only way you can access the equity in your home is to refinance your mortgage.
A cash-out refinance mortgage may result in your new mortgage having a higher balance than what you owe on your current mortgage. Yet, you can use the money for any purpose once you have it. For example, you can use the money to renovate your home, pay off high-interest debts, buy a new car, go on a vacation, and more.
You may be asking yourself if refinancing my home is a good idea at this time. Many mortgage lenders in Seal Beach can help you determine if this is a good time to refinance your home. Contact a lender today to see if you can benefit from a mortgage refinance.