4 Reasons Why You Should Refinance Now
Even though mortgage rates have risen slightly in the last few weeks, there could still be a good reason for you to refinance your home mortgage. If one of these four scenarios describes your situation, then refinancing might benefit you.
Move to a shorter-term loan
Moving from a 30-year fixed loan to a 15-year fixed loan could be a good financial decision. Even if you have a rate that is below the current market rate - moving to a 15-year fixed loan may save you thousands of dollars.
Obviously, the larger the loan amount, the more you could save. But even on a more modest loan amount, you can save money by moving to a 15-year fixed loan from a 30-year fixed loan. The savings are realized by reducing your total interest paid over the term of the loan. Your refinanced mortgage payment will be higher, so you do need to make sure you are comfortable with a higher monthly payment.
Move to a longer-term loan
You might be asking why this is a good reason after just suggesting that moving to a shorter-term loan was a good reason to refinance. Well, think about the situation in reverse. Let’s say you originally elected for a shorter-term loan (e.g., 15-year loan) to save on interest over the loan term. At the time, that decision made a lot of sense for your financial situation. But circumstances have changed. It could simply be skyrocketing living costs due to inflation and higher gas prices that are putting pressure on your budget. In that case, moving to a longer-term mortgage loan may be a better way to go. By lowering your monthly house payment, you could feel a lot less stressed.
Eliminate Mortgage Insurance premiums
Did the financial institution where you got your original mortgage loan require you to pay mortgage insurance; perhaps because you didn’t make a large down payment? If you are currently paying mortgage insurance and you are at a point where you have at least 20% equity in your home (or you can provide some cash to reach that level), then a refinance loan might be a good fit. And you can get rid of that pesky insurance.
Get a lower rate
Depending on when you got your original home loan, you could be paying a higher rate than the current market rate. If this is the situation, it is the number one reason to consider refinancing your home mortgage.
First National Bank’s mortgage lenders can help review your current mortgage and financial situation to see if refinancing is a good fit for you. If not, you are under no obligation and there is never a fee for a mortgage loan consultation. Most of all, First National Bank’s lenders will never recommend refinancing if it would not be beneficial to their clients.
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