Refinance to Lower Your Interest Rates
The Federal Reserve Bank is starting to edge interest rates higher from their historic lows. If you have a mortgage that is in good standing but has a higher interest rate it may be beneficial to you to refinance your mortgage with your financial lender to lower your interest rate. Lowering the interest of your mortgage will save you money by lowering the amount of money you have to pay towards interest every month. Evaluate the closing costs and determine if this is the correct course of action for you.
Refinance to Change from an Adjustable-Rate Mortgage to a Fix-Rate Mortgage
Due to the change economy, interest rates are slowly creeping higher, because of this raise, an adjustable rate mortgage (ARM) rate will increase as well. Some ARMs may have a balloon payment at the end of the loan, which could end up breaking your budget. In order to save money in the future you may want to change your mortgage to a fix-rate mortgage, locking in rates for the remaining time on your mortgage.
Refinance to Take Advantage of the HARP Solution
The Home Affordable Refinance Program or HARP is a US government program that helps those who have a Fannie Mae or Freddie Mac loan refinance to a more affordable mortgage. The program is for those home owners that are underwater on their mortgage or if the loan is either at or greater than 80 percent of mortgage amount. However, this program has a deadline and those who wish to apply must do so before September 30, 2017.
Refinance to Adjust the length of Your Mortgage
By refinancing the current amount on your home mortgage, you may be able to lower your monthly payment simply by extending the length of the loan. However, keep in mind, that adjusting the length of your mortgage will force you to pay a monthly payment for a longer term.
The other side of this option is to decrease the term of the loan such as going from a 30-year mortgage to a 15-year mortgage. Generally, a 15-year mortgage has a lower interest rate, you will pay less interest over the life of the loan, and you will be finished with the loan faster, but your monthly payment will be higher.
Refinance to Get Rid of PMI
PMI or Private Mortgage Insurance is a type of insurance that protects the lender for any mortgage that has been issued with little or no down payment. If you place a 20 percent down payment on a mortgage, then you avoid PMI. When a mortgage has 20 percent of equity in a home then, typically, the PMI is cancelled. If you choose to refinance your home, due to your home going up in value or if you have saved some money to add to the mortgage then you can reduce your monthly payment by removing the PMI.
As always it is best to shop around for the best rates and a lender that will have your best interest at heart, who will find a product that will best suit your needs.