Here are the key reasons to consider refinancing:
- Lower the interest rate
If mortgage rates have dropped since you first obtained your mortgage, a rate-and-term refinance can provide you with a lower rate (assuming you qualify). Ideally, that rate should be one-half to three-quarters of a percentage point lower than your current rate.
You might also qualify for a better interest rate if your credit score has improved since taking out your current loan. The best rates go to those with a score of at least 780. - Shorten the loan term
You can also refinance to shorten the time it takes to repay your loan. If you have a 30-year mortgage, for example, you might want to refinance to a new 15-year mortgage. - Change the rate structure
Along with lowering the rate or shortening the term, some borrowers refinance from an adjustable-rate mortgage (ARM) to a fixed-rate loan. The former gets you out of variable-rate monthly payments and into a fixed monthly payment, which could make it easier to budget for. - Eliminate private mortgage insurance (PMI)
If you have a conventional loan and your home’s value has increased, you could refinance to get out of paying private mortgage insurance (PMI) right away, or at least earlier.
If it frees up money in your monthly budget, reduces the overall cost of the loan or helps you achieve some other financial goal, refinancing can be well worth the work and money.
Call our Mortgage Experts at 801-399-9728 to discuss if refinancing is right for you!
– Article adapted from bankrate.com