Deciding whether to refinance your mortgage can be a challenge. With mortgage rates at an all-time low, many homeowners take steps to refinance their mortgages today. The key to successfully refinancing is taking the proper steps to improve your financial situation.

 

Refinancing means paying off your existing loan with the money you take out from a new loan, typically at a different interest rate or terms. The most common reasons homeowners refinance is to reduce their interest rate, pay off their loan sooner, or lower their monthly payments. With the right tips, you can refinance your mortgage with ease. Let’s dive right into the details.

 

Most Common Reasons to Refinance Your Mortgage

 

When interest rates drop considerably, many homeowners consider refinancing to take advantage of the cost-savings benefits. Refinancing your mortgage can help you pay off your loan faster and save a substantial amount of money in interest payments.

 

Homeowners refinance their mortgages for many reasons. This includes:

 

  • Shortening the term of your loan
  • Taking advantage of reduced interest rates
  • Converting from an adjustable to a fixed-rate mortgage
  • Tapping into home equity to remodel or upgrade your home or help with a financial emergency

 

Refinancing to Lower Interest Rate

 

One of the most common reasons people refinance is to lower their interest rates on their existing loans. This is beneficial because it saves you money while helping you build equity. If you are looking to reduce your monthly mortgage payment, refinancing is an excellent option for you.

 

Refinancing to Shorten the Term of Your Loan

 

If you want to pay off your mortgage sooner than initially planned, refinancing can help you shorten the term of your loan. Refinancing allows you to switch to a shorter-term loan while interest rates are lower. While your monthly payments may be higher, you will pay less money in interest long-term with this option.

 

Refinancing to Convert to Fixed-Rate Mortgage

 

When loan interest rates are low, many people choose to refinance to convert from an adjustable to a fixed-rate mortgage. With adjustable-rate mortgages, interest rates fluctuate. Locking in a low-interest fixed-rate is an excellent option for those looking to save money in the long run. Not only do you save on interest payments when fluctuations are high, but you have peace of mind that your interest rates won’t change over time.

 

Refinancing to Tap Consolidate Debt

 

In some cases, homeowners choose to refinance to consolidate debt or make upgrades to their homes. By working with the equity in your house to cover expenses like remodeling costs, some homeowners use refinancing as a means of covering the debt. In some cases, this is an excellent financial decision because of the low interest rates associated with refinancing your loan. However, since you are adding more debt on the top of your loan, you should consult a financial advisor before making this decision.

 

Contact All American Financial Services Today for a Consultation

 

If you are considering your options to refinance in Lancaster, we’re here to help. Contact All American Financial Services to schedule an appointment today.