Refinancing your existing mortgage may provide you with the opportunity to lower your interest rate, reduce your mortgage payment and adjust your loan term. For those homeowners who have lived in their home for more than a few years, pulling equity out of the property for everything from a luxurious vacation to making home improvements is a tempting potential benefit.
However, with property values and interest rates adjusting
frequently, you may wonder if now is the best time to refinance your
Using Equity From Your Refinance
One factor to consider when debating between refinancing now and
waiting relates to pulling equity out of your home. If you need access
to the cash now for home improvements or other purposes, refinancing now
may be ideal. Even if you do not need access to your equity for several
months or longer, you can lock in today’s rates and invest the money in
other vehicles, such as CDs or bonds, until you need the cash.
Anticipating Market Changes
You may have heard that the interest rates for home mortgages have
been slowly rising, and while they remain close to historic lows, they
are projected to continue to rise. Nobody can predict with certainty how
interest rates will adjust in the next few months and years, and
locking in today’s rates may be beneficial. Keep in mind that if rates
decline significantly in the near future, you can always look into
Reducing Your Principal
If you have a higher interest rate on your existing mortgage, your
principal balance may be reduced at a slower rate than if you refinance
to a lower interest rate. In addition, if you refinance from a 30-year
term to a shorter term length, your principal balance will also be
reduced more quickly in most cases. In many situations, refinancing your
home mortgage today may establish a more efficient repayment schedule
that allows you to accrue equity at a faster rate.
Each homeowner has unique factors to consider when refinancing based
on property value, credit rating, existing loan terms and other factors.
While many will benefit by refinancing an existing mortgage today, you
can speak with a mortgage professional for specific advice and
recommendations regarding your situation. Call your trusted mortgage
representative today to inquire about the options and to begin working
on your refinance loan application.