When is the ideal time to refinance a mortgage loan? For many homeowners, it could be now. According to recent study data, around 550,000 homeowners could see a substantial decrease in their mortgage rates due to a steady decline in rates that began in December. Thanks to this drop, this may be a good time to consider refinancing to improve your rates or free up the funds for a home improvement project.
Refinancing is the process in which you apply to have a new loan with better terms replace your previous loan, which will then fulfill the existing debt, paying off the previous loan. You will be responsible for paying off the new loan, which ideally would lower your payments and enable you to save money. While it may seem a bit complicated, with the right guidance, the process can be streamlined.
First Federal Bank Mortgage offers personalized assistance with the refinancing process. By contacting one of our loan experts, we can help you determine a rough estimate of what you will save should you decide to refinance, and our skilled loan experts will be available to offer you responsive, thoughtful support every step of the way.
Benefits of Refinancing
If you are looking to lower your mortgage rate or pay off your home loan faster, refinancing your home may be your best bet. There are a number of benefits that can come with refinancing your home.
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- Lower interest rates. This is the main reason many homeowners refinance. Typically, when you refinance, you can lower interest rates, thereby lowering monthly payments.
- Extra cash flow. Since your new balance is smaller than the originating balance, your payments will reduce, and you will save extra money. You can use this money on other priority expenses, such as emergency funds, medical costs, or a child’s college tuition.
- Changing the loan type or term. You can also use the opportunity to switch to a different type of loan, such as going from variable to a fixed-rate. You could also change the loan term, like going from a 30-year to a 15-year plan, which will reduce your interest rate. The trade-off for a shorter term is a higher monthly loan payment.
- Consolidation. If your loans are becoming too overwhelming for you to manage, it is logical to consolidate them into a single loan, particularly if you can get a lower interest rate by doing so. You could also use your home’s equity to consolidate higher interest debts like credit cards.
- Eliminating mortgage insurance. Those with equity also have the option to refinance to rid themselves of mortgage insurance, which can lower payments considerably, even if rates remain the same.
- Increased home value. Refinancing can also assist with improving the value of your home by providing the necessary funds for home upgrades and remodeling projects.
Given the current declining rates, it may be the perfect time to refinance. To see if refinancing your home could be the right decision for you and your family, reach out to one of our knowledgeable loan experts. First Federal Bank Mortgage offers a whole new way of doing home loans, with an attitude that is as independent as you are.
