Mortgages are one of those things that feel like a set-it-and-forget-it deal. You lock in your rate, sign the paperwork, and start making those monthly payments. Once all of that is said and done (and set in stone), it should then be time to just work on adding value to your house, right? But what if your mortgage isn’t working as well for you as it could be? That’s where refinancing comes in.
Okay, so think of it like this: you wouldn’t keep paying for a streaming service you don’t use anymore, or stick with a phone plan that’s charging you more than it should. Right? Well, refinancing your mortgage works the same way, it’s about making sure your home loan fits your life, not the other way around.
Now, if any of the following signs feel familiar, it might be time to refinance your mortgage for better terms and savings. With all of that said, here’s exactly what you need to know!
Interest Rates Have Dropped
If there’s one thing interest rates love to do, it’s change. Sometimes they’re up, sometimes they’re down, and if they’ve dropped since you got your mortgage, refinancing could mean serious savings. Overall, even a small dip can lower your monthly payments or save you thousands in interest over the life of your loan.
Your Credit Score Has Improved
If you really think about it; credit scores are like financial report cards, they show lenders how responsible you are with money. If your score has gone up since you bought your home, you might be able to refinance for a better deal. Maybe you’ve paid off some credit cards or made consistent, on-time payments for a while now. But whatever the reason, a stronger credit score could get you lower rates and better loan terms.
You’re Feeling the Squeeze with Monthly Payments
Yes, by all means, life happens, and sometimes those monthly mortgage payments start feeling a little too tight. Maybe it’s due to some unexpected expenses that are recently popping up or you just need a little more wiggle room, refinancing could help.
But by stretching out your loan term or snagging a lower interest rate, refinancing can reduce your monthly payments. Honestly, everyone deserves to have that little bit of extra breathing room, you included.
You’re Ready to Pay Off Your Home Sooner
But on the flip side, maybe your finances are in a good place, and you’re ready to crush that mortgage balance. Well, in that case, refinancing to a shorter loan term, like switching from 30 years to 15, can help you own your home outright faster. Sure, your monthly payments might go up a bit, but the savings on interest could be worth it. Plus, there’s something deeply satisfying about knowing your house is fully yours.
Your Home’s Value Has Increased
Have you checked what your home is worth lately? If its value has gone up, refinancing could open some exciting doors. For one, a higher home value might let you ditch private mortgage insurance, which means lower monthly payments. But at the same time that home equity could mean more renovations for the house, or even paying off some debt.