With the record low interest rates that we have been seeing these past years, you may be wondering if it is time to take advantage of these rates and refinancing your mortgage. It is important to understand exactly what refinancing is, when it is the right choice, and what are the risks associated with it. This is where your Newnan and Atlanta mortgage professional, like myself, benefit you by guiding you through the process and making sure that it is the best move for your financial health.
What does it mean to refinance?
To put it simply mortgage refinancing involves replacing your current mortgage with a new one. This means completely new rates and terms, and a lot more painstaking paperwork and forms.
Why should I refinance?
One of the main reason to refinance a mortgage loan is to take advantage of a lower rate or shorter term for your existing loan. When it is done for this reason, refinancing has the potential to save you money in the long run.
You can also refinance your mortgage to pull equity from your home. This equity can be used to pay for remodeling or upgrades to your home, also many times people use this equity to payoff high interest debts, like car loans and credit card debt. By doing this you pay off your high interest debt, and are left with the mortgage, which is a lower interest debt.
When Should You Refinance your Mortgage?
· Your goal is to get a lower interest rate and lower your monthly payment
· You Want to shorten the length of years on your mortgage.
· You need to get out of an adjustable-rate (ARM) or interest-only mortgage
· Want to create additional cash flow each month with your savings.
When You Shouldn’t Refinance Your Mortgage?
· You plan on moving within a year.
· You haven’t made timely payments on your mortgage within the last 12 months.
· You are upside-down on your mortgage and owe more than your property is worth. It may be difficult to be approved for a refinanced mortgage.
What are the risks?
Mortgage refinancing does have the potential to involve additional fees similar to those you paid when you closed on your original mortgage. There are also additional risks if your home decreases significantly in value. With most home loans, any costs incurred for your refinance can simply be rolled into the new loan. We will keep any refinancing costs to a minimum and will go over them in person so there are not any surprises at closing!
It is also important to use our handy mortgage refinancing calculator if it is the right choice for your situation.
To summarize, refinancing can be a great financial move if it reduces your mortgage payment, shortens the term of your loan or helps you build equity more quickly. When used carefully, it can also be a valuable tool in getting debt under control!
Whatever your reasons for wanting to refinance, I am here to help you every step of the way and make sure that it is the right decision for you.
Whether you’re seeking a Newnan mortgage or an Atlanta mortgage, I am an experienced professional in the area who is more than happy to help make your mortgage process a smooth one.
For further information or to ask a question, please get in touch with me today. I’d love to hear from you!