As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.
Mortgage rates have been holding steady at very low levels. Now is an excellent time to refinance and pay less interest or take advantage of the equity you have built in your home.
With rates being as good as they are, it’s a good time to go over three great reasons you might like to refinance and take advantage of the great market we’re in.
Lower Your Payment
One of the most common benefits people hope to see out of refinancing is the ability to lower their payment. Although rates are higher than they were when they were at their bottom, if you haven’t refinanced in a few years, you may be able to save money on your payment by lowering your rate. This has the bonus effect of allowing you to pay less interest over time.
Another way to lower your monthly mortgage payment is to change to a longer term. Although you end up paying higher interest by taking a longer term, it provides you with a certain amount of financial flexibility to spend your money elsewhere.
There are two important things to note here when we talk about possibly lengthening your term.
You don’t have to automatically go from a 15-year loan back to a 30-year loan. You can save money on a monthly basis without completely going back to square one. With our YOURgage program for Fannie Mae and Freddie Mac loans, you can pick any term you want, between 8 – 30 years. With FHA or VA loans, you also have a variety of term options.
Let’s say you have some extra money at the beginning of the month. You have the option of paying extra money directly toward your principal in order to cut down on the amount of interest you pay over the life of the loan. This way, you can cut down on some of the extra interest you pay by taking a longer term.
Shortening Your Term
On the flip side of taking a longer term, you can also take a term as short as 8 years depending on the type of loan product you choose.
You’ll have a higher monthly payment than if you take something like a 30-year term, but the real benefit here is that mortgage lenders and investors are willing to give you a lower interest rate because they know they’ll be getting the money back sooner.
Maybe you’ve been in a 30-year loan for a while and have extra money to put toward your principal on a monthly basis. However, instead of putting it toward your loan, you put it toward other things like movie tickets or a chair in the shape of a baseball glove.
If you like the idea of saving on interest, but lack the financial discipline to set aside more than is required, perhaps a shorter-term mortgage with a higher monthly payment could be just the push you need.
Utilizing Your Equity
America’s housing market has been making a comeback over the last several years. There’s no stronger proof of this than the fact that home values have been on a continual upward trend for some time now.
Because of this continuing value increase, you may be gaining equity in your home even faster than you would think, based on your monthly payments. This puts you at a particular advantage if you’re looking to take cash out of your home.
Perhaps you’re looking to create the master bathroom of your dreams. Taking cash out can give you the resources to do any remodeling you might want. This has the double bonus of potentially increasing your property value when it comes time to sell.
Converting your home equity into cash can also help give you financial flexibility. If you need to catch up in your retirement saving, your home can be a huge untapped financial resource. You could also use the cash if you are behind on saving for your child’s college fund or in any number of other ways.
Are you interested in refinancing to lower your payment, save on interest or tap into your home equity? You’ve come to the right place. You can get a full refinance approval online through Rocket Mortgage. If you’d prefer to start on the phone, one of our Home Loan Experts would be happy to take your call at (800) 785-4788. You can feel free to leave any questions for us in the comments section below.
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