When and Why to Refinance

Owning a property means a lot of things. Mainly, it’s a place where you live and/or work. For virtually everyone, it’s also an investment. A refinance is an important mechanism for both improving and leveraging your investment. There are several reasons for when and why you should consider a refinance – We explore some of these reasons in our latest blog.

Reduce Your Interest Rate

Interest rates are placed on any loan and is how a lender makes money. The interest rate you received at the time your loan was approved was based on several factors, including current market rates but also your personal credit score. Most homebuyers want to take advantage of the lowest rate possible. A couple of percentage points based on lower rates and/or better credit can make a huge difference. A dramatically increased credit score can make a big difference, even if market rates have not improved.

Take Equity from Your Home

You can also leverage the equity you’ve built in your home through a refinance. Whether you need to make home improvements, need money to pay for school or to eliminate other debt, a refinance can make a lot of sense.

Adjust the Repayment Period

People’s financial situations change all the time, and it’s possible that what might have worked well for you when you first closed on a property may no longer makes sense now. For instance, if you bought your first home on a modest salary with a 30-year mortgage and have since doubled your salary, you may want to refinance to a 15-year mortgage to save on interest. On the other hand, it’s possible that you’ve had a 15-year mortgage and the lower payment of a 30-year mortgage might make more sense for you and your budget at present time.

Switch to a Fixed Rate Loan

Mortgages are either adjustable or fixed rate. With the former, the interest rates adjust with the market – whether it’s going up or down. With the latter, the interest rate is fixed and will not go up or down with the market. Fixed rate loans are certainly more popular because they are predictable and won’t change, even if your job situation changes or your credit score drops.

Whatever you do, seek professional advice to ensure you are making the right decision.

Interested in learning more about refinancing options or ready to get started on one? Give Principle Abstract a call. Our team has years of experience assisting clients with refinancing, and can also refer you to the most reputable lenders and real estate professionals in the area.