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Financial Education

Financial Fitness Tip

Should I Refinance My Home?

Are you interested in reducing your monthly payments and a lower interest rate for your mortgage? Refinancing your mortgage may result in a lower monthly payment to free up money for other expenses. If you haven’t taken a look at your mortgage in the last five years, it may be time for you to consider refinancing.

Do Your Research 

When looking to refinance your home, make sure to do your research and shop around for the best rate and term that you can find. Don’t be afraid to send some e-mails, make a few calls, and even drive an extra few miles to another financial institution. The best rate may not be right around the corner, but if you’re able to reduce your rate over the course of your remaining mortgage, it can help save you money in the long run. Keep in mind; it also may be possible that there is not a current deal that fits your situation that would benefit you moving forward and that your current lender is the best option. While most original mortgages are required to be maintained for at least 12 months before they are able to be refinanced, you should always check with your original lender regarding your particular situation.

Consider Your Mortgage Type

Switching from an adjustable-rate or balloon mortgage to a fixed-rate mortgage is one of the most common reasons to refinance.  With rates still at all-time lows, it may be to your benefit to lock in your rate now.  However, if you don't plan to stay in your current home before your rate is scheduled to adjust or your balloon term expire, it may not be worth refinancing.  

Cash It Out 

Perhaps you're in need of extra money for your child's tuition, a home improvement project or maybe a vacation? Cash-out refinancing may help provide just that by allowing you to take out a new mortgage with its own term and repayment schedule, separate from your first mortgage.

Whatever the reason may be, you’ll want to consider the costs associated with the refinancing process as well as any possible prepayment penalties you may incur to make sure they do not outweigh the benefits and cost of refinancing. Be sure to check with your lender before finalizing any agreement to know you’re making the right decision.

Learn more about refinancing

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