There are a lot of factors to consider when deciding whether or not refinancing your mortgage is the right decision for you. In today's article, we will discuss some of the top scenarios in which refinancing would strongly be recommended.
One of the most common reasons for refinancing a mortgage is a lower interest rate. If rates drop and you are able to secure a lower rate, refinancing your mortgage makes a lot of sense. So, when market conditions change and the going interest rate is suddenly significantly lower than when you first purchased your home, refinancing your mortgage is well worth considering. This becomes especially true if you were in a loan where you are paying mortgage insurance - you might be able to possibly eliminate PMI by obtaining a conventional mortgage.
Maybe you started out with a 30-year term. If you find yourself in a position where you can reduce the term of the loan in years (let's say from 30 to 15 years), then we strongly urge you to consider exploring moving to a short term term loan (especially if rates are low). This will translate into huge savings over the life of the loan on interest that you will not have to pay. As a rule of thumb, the longer the term, the more years (duration) during which you have to make monthly payments, and consequently the more interest you end up paying. Shortening the term not only saves significantly on interest, but you will build equity at an accelerated rate and you will own the house faster.
One of the main reasons many homeowners refinance their mortgages is to restructure their finances and lower their monthly mortgage paymentss. Whether you are taking advantage of lower interests, or are switching from an adjustable-rate mortgage that is slated to adjust soon to a fixed-rate mortgage, refinancing can significantly reduce your monthly payments.
Are you sitting on a lot of home equity and are carrying high-interest credit card debt? For some, refinancing your mortgage can be an excellent way to consolidate debt. You can leverage your existing equity and refi with cash back, allowing you to use that money for debt consolidation, improving cash flow, budget manageability and your financial profile.
If you are considering mortgage refinancing, then you are at the right place. Diamond Residential Mortgage specializes in offering unique mortgage refinancing, helping first-time homebuyers, and providing non-qm solutions at competitive rates. Contact us today to learn how we can help you meet your financial needs.