Refinance Your Mortgage with These 5 Tips
Over time, the mortgage market fluctuates and creates new opportunities for homeowners to revise the terms of their mortgage. This is known as refinancing. When refinanced, a mortgage can include lower interest rates, home equity credit, and a restructured loan duration. If you are a homeowner looking to refinance your mortgage, these 5 tips can save you time and money in your search for the perfect home loan.
5 Tips to Refinance Your Mortgage
- Lock in a Cost-Efficient Rate. The goal of refinancing a mortgage is to lower a homeowner’s monthly payment and re-structure the length of time it will take to pay it off. According to the Federal Reserve Board, the interest rate on the mortgage needs to be low enough in order to make the home refinance process worthwhile. For ideal results, homeowners should seek refinance mortgage loans with rates 1-2% lower than their current mortgage.
- Evaluate the Terms. When it comes to mortgage refinancing, you should always read the fine print. Some lenders may offer lower rates, but with much longer terms. To determine if a loan is worthwhile compared to your current mortgage, multiply what you are currently paying (with interest) by the number of months left. Do the same for the refinance option and compare to determine if it is a good fit.
- Consider the Benefits of a New Type of Mortgage. If you are looking to refinance your mortgage, a great tip is to check out the variety of loan types lenders offer. This is because financial assets, such as property taxes and escrow accounts, can significantly impact your monthly payment amount. If your financial assets have grown or changed, you may benefit from switching to an adjustable-rate mortgage (ARM) or a fixed-rate mortgage (FRM), depending on your unique needs.
- Shop Around. The financially savvy homeowner is aware of the many options available for mortgage refinancing. Take the time to review your options and compare the benefits of each lender. Remember to include closing costs in your estimate of each refinance option.
- Refinance with a Mortgage Expert. At First Bank, we are skilled in helping homeowners refinance their mortgages. We are committed to doing our part to help local communities thrive and prosper through financial guidance and banking services. To discuss your mortgage refinance options, contact us today.
Loans are subject to credit approval.