4 reasons to refinance your mortgage

Evaluate whether mortgage refinancing suits you and your goals by weighing potential savings against costs.

Your life situation isn't permanent, so why should your home loan be? Refinancing lets you regain ‘home loan zen’ by creating new terms that work for you in the here and now. If you’re asking yourself “Should I refinance my mortgage?” these are different things a refi may help you achieve:

• Shorten your home loan terms
• Get a lower interest rate
• Lower your monthly home loan payment
• Access cash from the equity in your home to pay for renovations or consolidate other loans and debts
• Enable you to stop paying monthly home loan insurance (PMI)

Here are some reasons to consider refinancing your home loan now:

Reason #1 — Interest rates

Top-notch mortgage rates and terms go to those with great credit (think 740 or higher). So, take a peek at your credit report to understand where you stand. If you're carrying a lot of credit card debt or missed a payment lately, lenders will notice.

Reason #2 — Are you making more green these days?

Maybe you got a raise or an inheritance — or you sold the shiny sports car that just sat in your garage. Whatever the circumstances, if you’re financially more well-off than you were when you got your home loan, you could benefit from the lower interest rate of a shorter-term loan. And while a 15-year home loan may come with a higher monthly payment than a 30-year loan, the lower interest rate creates more long-term savings.

No one likes having bills to pay. If you can eliminate your home loan payment more quickly, you can get rid of one more thing to worry about and truly get settled into your abode. And if you're not the type of person who wants to work forever, paying more toward your home loan now can give you a boost in your budget come retirement age.

Reason #3 — Lock in a fixed rate

When you bought your home, maybe you went all googly-eyed at the sight of low interest rates offered with an adjustable-rate mortgage (ARM). Or perhaps you didn't realize at the time that your house purchase would be your “forever home,” and now you've fallen deeply in love with your digs.

While an ARM often starts with lower monthly payments, the amount you owe each month can go up significantly over time as your rate adjusts. As interest rates climb and climb, you might be feeling the pain in your wallet.

Refinancing to change to a fixed-rate home loan, so you can lock in a set rate and monthly payment can help you rest easy knowing your rates won’t fluctuate or skyrocket on the Fed’s whim. Your home should be your happy place — not a source of stress.

Reason #4 — Lower your monthly payment

Did you take out a home loan when rates were higher than they are now? When refinancing for a lower interest rate, it’s common to refinance to another 30-year term. This can add more to your cash flow, which you can use to pay for significant life events, such as having kids, starting a business or staying financially healthy after you or your spouse want to pursue a career change.

Did you take out a home loan when rates were higher than they are now? When refinancing for a lower interest rate, it’s common to refinance to another 30-year term. This can add more to your cash flow, which you can use to pay for significant life events, such as having kids, starting a business or staying financially healthy after you or your spouse want to pursue a career change.

You can get good new terms for your good old home

A home is one of the most significant purchases that you can make. However, the terms that you agreed to when you first moved in may not work for you now. And that's OK. At Desert Financial, we get it: Things change, including your financial situation and how you want to pay for your home over time.

If you’re wondering if you should refinance your mortgage, the first step is to talk with a  home loan advisor about the refinancing options available to you. You may be able to save more money immediately or in the long term and make your happy home even more blissful with a better home loan.