Interest rates rise, and then they fall. They go up, and then they go back down. So how do you know if now is the right time to refinance your existing mortgage?
It is important to first, ask yourself, why you want to refinance.
Once you know why, we can help you determine when.
Here are 6 of the most common reasons people refinance.
1. Increase monthly cash flow - if the interest rate on your new loan is lower than your existing rate, or you decide to extend your term, this will lead to a drop in your monthly payment, saving you money each month.
2. Pay off debt - if you decide to pull cash out when you refinance, or your monthly saving are large enough, it can help you pay off high interest credit card debt.
3. Getting a better loan - Need to switch from an adjustable rate to a fixed rate? Maybe rates have dropped and you'd like to save on your monthly payment. Whatever the reason, refinancing provides an opportunity to restructure your mortgage.
4. Increase your long term net worth - Many people invest the savings into retirement accounts, college funds, or use the extra cash to pay their mortgage off faster. Did you know if you make just one extra payment a month it can cut a 30 year mortgage down 8 years?
5. Tax deductible interest - the interest paid on a home mortgage is generally tax deductible. This could mean huge savings for you come tax return season. If you would like to speak with a licensed tax professional, please visit our vendor list. We have personally vetted these individuals, and many members of our team use the business on this list.