A mortgage on your home is probably the largest financial commitment you have. At present, many people are looking at refinancing their mortgages as this gives them financial gain. What this means is that they are paying off an existing loan and replacing it with a new one. There are numerous reasons why these homeowners consider a refinance. The usual reasons are that they want to negotiate a lower interest rate, to shorten the term of their mortgage, to convert the mortgage from an adjustable-rate mortgage to a fixed-rate mortgage (or vice versa). Some people are also keen to tap their home’s equity so that they can finance another debt, or can consolidate their debt.
Is refinancing in Maryville right for you?
Any refinancing is likely to cost a percentage of the loan’s principal. Just as when you took out your original mortgage there will need to be an appraisal of your home as well as title search and application fees. As a result, you’d need to take these fees into consideration when you are doing your sums.
One of the most popular reasons for refinancing is to secure a lower interest rate than you have on your existing loan. In the past, if you were able to reduce the interest rate by about 2% it was usually cost effective to refinance. However, speak to your local bank and work the numbers, as it may now be that even a 1% reduction in interest will make refinancing worthwhile. If you’re able to reduce your interest rate, you will save money but will also be able to build increased equity in your home, while paying lower repayments per month.
Shortening the term of the loan
Lower interest rates are an excellent opportunity for you to refinance for another loan that has a shorter term but doesn’t cost you much more per month. Paying off your mortgage in less time will save you greatly on interest charges. The most important thing will be to get more information from experts such as those at a community bank so that you can make an informed decision.
