Deciding whether you should refinance your mortgage can be difficult because there can be so many factors involved. However, you may be able to get a lower interest rate on your loan which will most likely lower monthly costs. Here are four things you will want to consider before deciding to refinance your mortgage.
What Type of Interest is Available
You may have heard that in order to make it worth the time and expense you need to decrease your interest by a percentage point. However this is not always true, especially if you plan on staying in your home for years to come. Any sort of decrease in your mortgage can add up over time. If you are unsure if the interest given to you is worth it you can find refinance calculators online to help you in the process.
Closing Costs Still Matter
Even though you have already paid closing costs you will still need to pay them when refinancing. At times companies will give you deals on closing costs because you will be getting your mortgage through them. Start by talking to the company you are currently with and then also use online mortgage calculators to help make the decision. Be sure you also look into other companies and what they have to offer.
Deciding on Your Type of Mortgage
If you choose a 15-year loan your payments will be higher than a 30-year loan but you will be able to get a lower interest rate. Before deciding to refinance your mortgage make sure you think about where you will be in 20 or 30 years. Many people often opt for the 30-year mortgage but pay it off faster because their mortgage payments are lower.
Choosing Between a Fixed Rate or Adjustable-Rate Mortgage
If you are considering selling your home in the next three to five years an adjustable-rate mortgage may be the way to go due to low interest rates. However, if you are planning on staying in your home an adjustable-rate mortgage may not be right for you. Even though the interest rates are low now they may not always stay this way, causing your monthly costs to continue to rise over time as the rates do.
Refinancing your home can save you money in the long run as long as you do it right. Make sure you consider all your options and do your research to make sure you get the right price. You want to make sure this is the right choice for your future plans.