With all the talk in the news of rates coming down, you may be curious about when to refinance, how much you can save, or what other perks refinancing can offer. We’ve got you covered. From lowering your interest rate to tapping into your home’s equity. Working with a local Northpoint Loan Officer can help you navigate all options and figure out what’s best for you. Ready to dive in? Let’s get started!
How much will lowering my interest rate save me?
Multiple factors will come into play, not just your current interest rate. Loan amount, loan term, and if you have PMI (private mortgage insurance) will all impact your savings. We will work with you to determine if there is a tangible benefit to you, and we’ll offer structuring options that help you achieve your long term financial goals.
What else can refinancing do besides lower my rate?
There’s so much more to refinancing than just lowering your rate! Consider these other reasons:
Change loan term
When you refinance, in addition to getting a new interest rate, you can also change the term or length of your mortgage. Many people refinance from a 30-year to a 15 or 20 year loan. Paying off your loan over a shorter amount of time can a substantially lower the amount of interest paid over the life of the loan.
If cash-flow is a most important to you, refinancing back to a fresh 30-year fixed will add time, and most likely interest, back onto your mortgage. But for some, the lowest payment can be crucial.
Get rid of pesky PMI
Property values have been increasing significantly! Refinancing may allow you to reduce, or even eliminate PMI! This alone could save you hundreds of dollars a month.
Tap into your home’s equity
A cash-out refinance allows you to use the equity you’ve built in your home. Mortgage interest rates are typically far lower than personal loan rates. The proceeds from a cash-out refinance can be used for many things, including home renovations, college tuition, investments, and debt consolidation. Read all about using proceeds from a cash-out refinance for debt relief here.
Change loan type
Switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgages, or vice versa, is another reason to refinance. Want to do some renovations but don’t have cash on hand? You can even refi into a renovation loan! Did you or your spouse serve in the military, but the initial loan was not a VA loan? Refi into a VA loan to take advantage of the benefits you’ve earned!
Will it cost me money to refinance?
Refinancing your mortgage does involve closing costs, just like any other mortgage. However, there are various options to help you manage these expenses. These include paying points upfront to secure the lowest possible interest rate, which can lead to significant savings over the life of your loan. By working closely with you, our Loan Officers will present multiple scenarios, helping you choose the option that best fits your long-term financial plan.
Determining the right time to refinance your mortgage is a nuanced decision that depends on various factors, such as your current interest rate, loan amount, and financial goals.
Refinancing doesn’t have to be just about scoring a lower interest rate. Refinancing can offer additional benefits, from changing your loan term to eliminating PMI, tapping into your home's equity, and even switching loan types. However, it's essential to carefully weigh these options against potential downsides, such as closing costs and the impact on your loan term.
Navigating the refinancing process requires a personalized approach, and collaborating with a local lending expert from Northpoint can provide valuable insights. We’ll help you assess your current mortgage structure, explore available options, and make informed decisions tailored to your individual needs. Remember, each loan is unique, and working with a knowledgeable professional ensures that you maximize the potential savings and benefits while minimizing any drawbacks.
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