Is it always a great idea to refinance your mortgage? If you don’t have a lot of experience in this area, this one might have you stumped. Here are three reasons you should refinance…
You could lower your monthly payment: When you bought your house, your lender gave you an interest rate that was highly affected by your credit score (other factors also included). If your credit was good but not great, you probably didn’t get the best possible rate. If you’ve made improvements to your credit score in the time since you purchased your home, it’s quite possible that you could now get a lower rate which could lead to a lower payment and more money left in your wallet every month.
You’re looking to sell at some point: With a cash-out refinance, your new mortgage would be for more than you owe on your home. This could be helpful if you’re looking for some extra cash to improve your home’s value. Additions or upgrades can be nice if you’re looking to sell your home in the next few years. Just keep in mind that you’ll have to pay closing costs again, so it may not be worth it.
You could save a lot over time: If you’re currently paying on a 30-year mortgage with a not-so-great interest rate, it could be worth your time to try and get a lower rate on a 15-year mortgage, especially if you have no plans on moving. Your monthly payment will be higher, but depending on the rate you get, you could save yourself a bundle in the long-run.