Are you looking to refinance your mortgage? Refinancing helps you to get a better interest rate, which can lower monthly payments or get cash out of the deal. However, refinancing is not for everyone. Here are some tips on how to decide if it’s right for you.
Why Refinance?
There are several reasons why you would consider mortgage refinance. Refinancing is the process of obtaining a new loan to replace an existing one with more favorable terms. There are many advantages to refinancing, including:
- Lower interest rate
- Cash out
- Lower monthly payments
- Eliminate debt consolidation loans
Less Interest Rate
You can save money on your mortgage by refinancing to a lower interest rate. If you have a good credit, you can obtain a lower interest rate than your original mortgage. The amount you save depends on the amount of your loan and the length of time until it matures.
If you are able to refinance into a fixed-rate mortgage and there is no prepayment penalty for paying off the loan early, refinancing may be an option for you. SoFi is one of several online lenders that provide a variety of financial products and services, including mortgage refinancing.
More Time to Pay
You can get more time to pay your mortgage by refinancing. The most obvious way is to refinance at a lower rate, which will make the monthly payments smaller and stretch out how long you’re paying off your home loan. It’s important to note that this option isn’t right for everyone or every situation, so be sure to consult with your financial advisor before making any major decisions about mortgage refinance.
The easiest way to calculate how much longer it’ll take you to pay off your mortgage after refinancing is by using this simple formula:
- (New Interest Rate – Old Interest Rate) / Old Monthly Payment = Additional Months
Get Cash Out
Cash out is the amount of money you can take from your home equity. It is also called “draw” or “borrowing against the value of your house.” For example, if you have a $200,000 mortgage on a home worth $300K and the bank allows you to get cash out at 5%, then this means that for every $100K borrowed against your home equity, it would cost $1 per month (5%/12). This comes down to approximately $633 per year in fees, more than most people’s monthly internet bill!
When to Refinance?
Refinancing is not a decision you should make lightly. It’s also not something that you should do without careful consideration of your finances and payment history. That said, there are several good reasons to consider refinancing your mortgage:
- If you want to lower your monthly payments, refinancing may be for you.
- If you want to pay off your mortgage faster than normal, refinancing may be for you.
- And if taking cash out of the equity in your home appeals to you (perhaps because it would allow you to invest in other things), then again—refinancing might be an option worth exploring!
Mortgage refinance is a great way to reduce your monthly payments, lower interest rates and get cash out. If your home value has increased significantly since your last loan, it is highly recommended that you consider refinancing. However, there are many factors to consider before deciding whether or not refinance is right for you.
