Many homeowners refinance house loans to reduce their monthly mortgage payments. Adjusting your interest rate for a mortgage can reduce your monthly payment, and lowering interest rates help you save a great deal of money over the life of your loan. But, in order to find the best mortgage refinance offer available, you will have to consider many factors including what type of interest rate you are looking for, whether you qualify for a fixed or adjustable rate mortgage, the term of the refinance loan, and the cost of the refinance mortgage.
You can choose to refinance house payments for several reasons. You may have a poor credit rating, be trapped in a long-term loan agreement, or need a break on your current mortgage obligation. In order to determine which of these situations applies to your situation, you will first need to know your credit score and FICO score. These numbers will give you a relative idea of how likely you are to default on your loan, so you may want to consider a refinance with a lower interest rate if this is a concern.
If you plan to refinance to free up money for spending, consider refinancing for a shorter term. This may help if your goal is to pay off the mortgage sooner than the end of your term. Another option for saving money on monthly payments is to refinance with a longer term, such as 30 years. This will allow you to lock in a better interest rate, reducing your payments for the duration of your loan term.
If you own your home, it is important that you understand the terms of your existing mortgage agreement. It is possible that you can reduce your monthly mortgage payment by refinancing in certain circumstances. If you have an interest only mortgage and your payment is at a lower value than the current mortgage, your lender may be willing to reduce the interest rate. If you owe more than the value of your property, your lender may be willing to waive points (commonly called “premiums”), which add points to your mortgage. Discuss any potential refinancing options with your current lender.
Consider reducing your interest, if you can. Lowering your interest rate can save you thousands of dollars over the life of your mortgage. This is especially true if your refinance is intended as an introductory offer. Be sure to discuss this option with your financial counselor.
Do your homework before deciding on a specific refinance. Shop for the best mortgage and interest rates and compare several offers. Also, research any available government programs that may apply to your specific situation. If there are estate taxes on your home, talk with a real estate agent about this issue.
Your financial situation will determine if you can qualify for a new mortgage. If you currently have a house, it’s likely you have homeowner’s insurance. Ask your lender whether you can drop it, or whether you will have to pay an extra fee for it. It may also be a good idea to consider selling your house rather than refinancing to get lower monthly payments.
You may decide to sell your house anyway. This will depend on the type of refinance you’re getting. If you have good credit, you may be able to get more money. On the other hand, if you don’t own the house yet but have plans to buy it in the future, refinancing may make more sense. Research your options thoroughly before deciding if it’s a good idea to refinance your existing mortgage.