With interest rates at historic lows, have you been wondering if refinancing your home would be a good idea? Each situation is different, but here are 6 considerations that can help you to make a decision.
- Interest Rate - Of course, the most popular reason for a refinance is to take advantage of a lower interest rate. Interest expense will decrease, and payments will go down. However, if you increase the years to payoff, you will probably spend more interest overall. It may be a good trade-off for lower payments now.
- Convert an ARM - If your current loan is an Adjustable Rate Mortgage, you may want to take advantage of current low rates to convert to a fixed mortgage. This does away with risk of interest rate increase ARM resets in the future.
- Take Cash Out - While the days of fast appreciation are no longer with us, there can still be reasons to take equity out of your home for improvements or other reasons. These loans are more difficult to get these days, but still available.
- Cash for More Real Estate - Those homeowners with significant equity may see opportunities for real estate investment. Taking cash out of one property to finance the purchase of another can be the right decision if the numbers work.
- Cancel a HELOC - Some homeowners may want to pay off past Home Equity Lines of Credit balances, as those rates may be adjustable, or high enough to make a total refinance for one loan a good decision.
- Divorce - While not a pleasant situation, refinancing can be a way to buy out a spouse's interest in a home.
If you've been considering refinancing for any of these or other reasons, check with us to see if your situation will make it a good financial decision.