Tag Archives: mortgage

When is the Right Time to Refinance Your Mortgage?

Man writing Mortgage Refinance with black marker on visual screenHomeowners have various reasons when refinancing their mortgage. It can be to lower the interest rate, to reduce the monthly payment, or to shorten the term of the loan.

You have a lot to think before you decide to go for refinancing. Here are some key points to help you know if it is the right time and option for you to refinance your mortgage.

Interest rates have gone down

Many homeowners in Phoenix, Arizona choose to refinance their mortgage when interest rates are at an all-time low. A lower interest rate can decrease your monthly payment, and consequently, increase your savings.

You want a shorter repayment period

Aside from decreasing your monthly payment, a lower interest rate can also shorten the term of your loan. Say, you want to cut your 30-year mortgage to a term of only 15 years. Refinancing to a lower interest rate can shorten your term in half with only minimal change in your monthly payment.

You want to lower your monthly payment

On the other hand, you may want to lower your monthly payment, even if you cannot reduce your interest rate. You can do this by refinancing your mortgage to a longer term.

You plan to stay in your home for a longer time

If you have plans of moving out after a few years, it may not be a good idea to refinance. Refinancing will cost a small percentage of the mortgage’s principal. If you do not plan to stay in your home for a longer time, the cost of refinancing may negate any potential savings you could generate from a lower interest rate or a shorter term.

Refinancing will only be a smart move for you if it will reduce your mortgage payments or shorten the term of your loan. Carefully assess these points first before you finally decide to go for refinancing.

Four Reasons to Refinance Your Mortgage

A couple speaking with a financial adviserAccording to a recent survey, half of American families are living from paycheck to paycheck, struggling to increase their monthly savings. Only the top 5% of U.S. Households have additional income to match the rising housing cost since 1975. More people are considering to refinance their mortgages in Fort Myers to minimize their expenses and increase their savings. Here are four reasons why you should refinance your mortgage.

Shorten Your Loan Term

Refinancing can help you shorten the term of your loan. Currently, interest rates are at their record low, and this is the opportunity to have your loan recalculated to a shorter payment schedule with a much lower interest rate. A mortgage calculator may come in handy to see your new payment scheme.

Lower Interest Rates, Increased Savings

A 30-year mortgage is above 3% while 15-year loans may even yield a lower rate. Refinancing your mortgage in Fort Myers may help you get a lower interest rate and reduce your payments. This would also help you increase your monthly savings that you can invest or spend on other things.

Fixed-Rate Loans

Take advantage of the current low-interest rates and apply for a fixed-rate loan if you don’t have one. This could protect you in case the interest rates increase or change in the coming years.

Cash-Out Home Equity

This might be a good financial move to use refinancing to cash out your home equity. Depending on your situation, you can use this to start a new business or investment, given that you can responsibly manage your debts.

More Financial Flexibility

The current low-interest rates in the US economy is a good opportunity to refinance your mortgages. This can help you have more financial flexibility and even have more savings.


Home Diaries: Are You Ready for a 15-Year Mortgage?

mortgageMortgages usually come in either 30 or 15-year durations, and the choice has a huge impact on your finances. Shorter mortgages have gradually become more popular among today’s homebuyers. It is easy to see why; a 15 year loan has several attractive selling points:

  • Significant interest savings, usually amounting to tens of thousands of dollars
  • Quick loan payments to make room for retirement and other financial obligations
  • A faster way to build equity in your property

These advantages are great, but the drawbacks are also worth considering. A 15-year mortgage always has a higher monthly payment. If you wind up in a financial emergency, this could be a massive burden. In the worst case, you may have to refinance or sell to avoid foreclosure.

Despite it being the best choice for long-term savers, not everyone is capable of taking on a 15-year mortgage. To find out whether one would be suitable for you, ask yourself the following questions.

  1. “Will my monthly income support it?” – Experts suggest that no more than 25% of your monthly income should go towards a mortgage. Anything more than that may be unsustainable over long periods. Ideally, you should be able to pay it off even on just one income source.
  2. “What other responsibilities will I have in the future?” – If you plan to have children or switch careers sometime in the near future, the instability could greatly affect your ability to pay off the loan. As Utah mortgage professionals explains, a 30-year loan might be a safer choice.
  3. “Can I reliably maintain an emergency fund?” – As mentioned earlier, a financial emergency, like your car breaking down or losing your job, could be disastrous. You need to be capable of building and maintaining an emergency fund for these instances.

A mortgage is the biggest debt you will ever have. Before making your decision, weigh your options and consider every relevant factor.