You bought your house and got your mortgage; no need to worry about it for the next thirty years unless you move, right? Actually, it’s smart to keep an eye on the mortgage rate environment and consider your own goals and financial picture. Refinancing your mortgage could have a positive impact on your finances.

Potential Benefits of Refinancing

How can refinancing your mortgage positively affect your wallet?

  • Lower your monthly payments. With a lower interest rate or extended term, you can reduce your mortgage payment each month.
  • Reduce your home’s total cost. Reducing your interest rate and/or shortening your term will help you pay off your home sooner and save big on interest.
  • Free up cash. A cash out refinance accesses the equity in your home to cover a major expense like home renovations, debt consolidation, or other major purchases at a low interest rate.

How to Know if You Should Refinance

Take a look at your mortgage and the current mortgage rate environment to decide whether it’s time to refresh your financing. These conditions are signs that it may be worth considering:

  • Interest rates have dropped. If the available mortgage rates are better than what you’re paying, refinancing is a great opportunity to lower your payment or pay off your mortgage faster.
  • Your credit score has improved. A credit score that has gone up significantly may qualify you for a better interest rate.
  • You’ve increased your home’s value. If you’ve been doing home renovations or otherwise increased the value of your home, refinancing will let you take advantage of the equity you’ve built.
  • You want to pay off your loan sooner. Maybe you’ve made some significant career advances since you originally took out your mortgage and can afford a bigger monthly payment. Refinancing at a shorter term will get your home paid off sooner and save significantly on total interest expense. A paid-off mortgage is a great situation to be in as you plan for retirement down the line.
  • You want to get rid of PMI. While you don’t necessarily have to refinance to remove PMI, which usually requires having at least 20% equity in your home, it may be a good time to refinance. If you’re basing your request to remove PMI on increased value of your home (rather than paying your loan down to 78% of the purchase price), you’ll need to have an appraisal. At the point, if rates are good, you might as well take the few extra steps to refinance and save on interest as well removing PMI.

The Mortgage Refinancing Process

Does refinancing sound like it will make sense for you? Here’s what you can expect when you start the ball rolling on your refinance:

  1. Start by getting in touch with our Mortgage Consultant to complete your application over the phone. You’ll provide details on your home and current loan, and your credit will be pulled.
  2. After reviewing your application and credit report, we’ll talk numbers (interest rate, term, etc.). If everything sounds good, we’ll set up a home appraisal to confirm the value of your home.
  3. After all the t’s are crossed and i’s dotted, it’s time to close on your new loan. Wonder about closing costs? Your closing costs consist of fees for a credit report and underwriting plus other third-party fees traditional with any lender: appraisal, recording fees, title insurance, transfer taxes, property taxes, and the cost of a homeowners' insurance policy.

Mortgage Alternatives

Keep in mind that traditional refinancing isn’t your only option. A home equity loan could get you a better rate and lower closings costs. This type of loan doesn’t wrap in insurance and tax payments the way an escrow account does for a conventional mortgage, but you can create your own custom savings account that you pay into every month just for those expenses.  

Ready to Save?

Let our Mortgage Consultant guide you through the refinancing process. Call 1-800-641-5036, and our Mortgage Consultant will help find the best fit.

Janet Weinhofer

Janet Weinhofer

Jan is the VP of Lending at GOLD. She directs and coordinates all lending activities within the credit union, ensuring compliance with lending policies. She ensures her team provides friendly, professional, timely, and personal service to all our Members. Jan is proud to be part of GOLD’s mission to empower our Members to achieve personal financial success.

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