If you have a home, chances are that you are receiving a lot of offers to refinance your home. This can cause you to wonder if it is something that is actually worth doing. Here are some reasons why refinancing loans on your home might be worth it.
You Can Save On The Closing Costs
There is more to refinancing than just getting a new interest rate and starting the loan period over again. You'll need to pay for the closing costs on the loan for the mortgage lender to handle all of the paperwork involved with getting a new mortgage. A good rule to follow about when to refinance is that if you'll save enough money to cover the closing costs within a year or two.
Work with your mortgage lender to determine your exact closing costs to refinance your home. Then look at how much money you'll be saving on your monthly mortgage. Use that information to calculate how many months it will take to break even on the closing costs. If it is going to be several years until you break even, refinancing is not right for you. However, breaking even very quickly can make refinancing practical.
You Don't Plan On Moving Anytime Soon
Many people know that they are settled into where they are going to live and will not be moving any time soon. This may be due to having children that are going to the local schools and having no desire to move until they've graduated from high school. If so, you know that you will see some long term savings by having a reduced interest rate that will definitely pay off.
You Improved Your Credit Score
If you first got your mortgage when you had bad credit, you likely received a bad interest rate due to it. If your credit has improved a lot since you got your mortgage, it is possible that you will receive a much better interest rate. When you combine that with interest rates that have fallen in general, you can end up seeing some significant savings in your mortgage payment. This can help you save more money each month instead of just putting it towards the house, which can provide you with more money to spend on the things that you need for you and your family.
Speak to a mortgage expert for further advice about refinancing your mortgage to lower your monthly payment.
