As a homeowner, it’s important to stay on top of your finances. One key factor in doing so is making sure you’re getting the most out of your mortgage. If you’re goals or situation have changed or if better mortgage options have become available, it may be time to reassess your loan and decide if a refinance is right for you. Here are some of the benefits you might discover during an annual mortgage review.
Lowering your monthly payment
Mortgage rates can change a lot in a year, and that’s certainly been true this past year. Rates dropped to record lows in 2020, so if you’ve had your mortgage for a while, there’s a good chance a lower rate is now available. That means you may be able to refinance to a better rate and reduce your monthly payment to save money over the life of your loan.
Taking cash out
If you’ve built up enough equity in your home, and you need some extra cash, a cash-out refinance may be a good idea. With this type of refinance, you can replace your current mortgage with a new one for more than you currently owe and receive the difference in cash. You can use this cash to renovate your home, pay for college expenses or big purchases, consolidate high-interest debt or anything else.
Fixing an adjustable rate
If you have an adjustable-rate mortgage (ARM), your interest rate and your monthly payment can fluctuate according to market rates and the terms of your loan. This may be fine during your ARM’s fixed-rate intro period or if market rates are steady or falling, but if rates are rising during your adjustable-rate period, your monthly payment can rise too. That’s why now may be a good time to refinance an ARM into a fixed-rate mortgage to gain the stability and peace of mind of a rate and a monthly principal and interest payment that will never change for the life of the loan.
Removing mortgage insurance premiums
If your monthly mortgage payment includes a mortgage insurance premium, there’s good news! After you’ve built up enough equity in your home, you may be able to get rid of your mortgage insurance payment. Refinancing your mortgage is one way to remove mortgage insurance early if you have a conventional (non-government) mortgage, and it’s the only way to remove mortgage insurance from an FHA loan or the annual fee from a USDA loan. The bigger your mortgage insurance premium, the bigger your potential savings.
It’s always wise to get an annual professional opinion on your mortgage to see if you can lower your monthly payment or obtain other benefits from refinancing. If you’re ready for your mortgage review, get in touch today!