Are you considering refinancing your mortgage for better mortgage management but unsure if it’s the right decision? Here’s what a top-rated lender advises:
Refinancing a mortgage is never a short-term venture, but it must instead be planned considering all possible future contingencies; it’s a farsighted approach. Your aim to refinance should be to improve your overall financial situation and to gain greater benefits. As easy as refinancing sounds, it can get too troublesome by inadequate knowledge and poor decision-making. Unless you’re an experienced finance expert, you need professional advice to make the right move.
Here’s the expert lenders’ advice on when to consider refinancing your mortgage:
To shorten your loan-term
Experts deem refinancing your mortgage when it helps to reduce the term of your existing loan. If you have other plans for the future, maybe to finance foreign education for your children or any further significant investments, refinancing could be a good move. For such plans, you’d want to settle all present liabilities to pursue greater things in the future and here’s when this option would help.
Shortening your term is suitable when you don’t want to stay in your home for a longer period of time, off course there are other factors to consider alongside this as well.
You’re saving money
Paying interests alone can sometimes lead you to bankruptcy. Refinancing is a good option when faced with lower interest rates, which reduce the amount of each of your monthly payments. Lenders advise refinancing when you can save up to 1%-2% on interest. Saving on interest through refinancing can be the best choice if you have a longer loan term. Hence, the amount you save over time can turn out reasonably satisfying.
To shrink debts
Sometimes, people take multiple loans for their needs, but these debts can accumulate into larger sums, costing them a fortune. So refinancing is advisable when it allows you to shrink other big loans by getting lower interest rates. It’s also a good option considering the time value of money. Refinancing can help settle those debts whose terms are near to end.
To switch from adjustable to fixed rates or vice versa
Switching from Adjustable-Rate Mortgage (ARM) to Fixed-Rate Mortgage (FRM) and vice versa under favorable conditions is a good option to save money, though it requires more diligence. Refinancing helps to switch between these two modes of mortgage loans. The key determinant here is the interest rate trends.
If you have currently signed up for an ARM, but the interest rates are on a constant hike, you are bound to incur large monthly payables compare to waht you might be have to pay under an FRM. These large sums of payables skyrocket the mortgage’s entire cost. Hence, a switch to FRM is the smart move.
On the other end, if the interest rates are continually dropping, an FRM could cost you way more than ARM. The ARM, in this case, would enable you to save regularly, especially when your loan term is longer. Therefore, this would be the right time to switch to FRM by refinancing.
Final Word
Refinancing could be a game changer under suitable conditions, as well as a huge fiasco if done at the wrong time. It will always be long-term planning that calls for keeping your eyes open all the time and adjusting to changes. That is indeed not a piece of cake for just anyone. Hence, an expert lender can only guide you to making the best decisions.
Call Elite Mortgage Source, LLC at (239) 307-6300 to talk to our expert lender today.
