You found the right home for you, which some would say is the biggest hurdle to becoming a homeowner.
Flash-forward to present day and you’ve probably been settled in your property for at least a few years. You’re happy in the home you’ve created, but the terms of your mortgage could be better tailored to your current lifestyle. Or maybe there are repairs that need to be financed, renovations you’ve been dreaming of or other costs that have come up over the years. Regardless of the reason, refinancing your mortgage presents a lot of options for homeowners.
What is Refinancing?
Refinancing is when homeowners take out a new home loan to replace their existing one. The new loan then pays off the initial mortgage loan. Depending on your goals, refinancing your home loan can reduce your monthly payments and help you realize significant, long-term savings.
Reasons to consider refinancing:
- Your credit has improved, meaning you may be able to get a better rate even if rates haven’t gone down.
- Your financial situation has changed. Have you changed careers or received a salary increase?
- You’re looking to consolidate your other types of debt, like another mortgage, student loans or car loans.
- You’re thinking about making home improvements or repairs that could become
- You want to take advantage of low interest rates.
Benefits of Refinancing a Home Loan
Refinancing presents a great opportunity to get a new mortgage that’s better suited to your current lifestyle and financial position. Some of the major benefits of refinancing include:
Reduced loan terms
Refinancing will also update your loan terms. This can mean moving from a 30-year loan to a 25-year loan so that you can pay off the loan and own your home quicker. By reducing your loan terms, you are also lowering the amount of interest you must pay your lender.
See Refinancing Loan Example #1 below
Lowered monthly payments
When you finalized your initial loan terms, you agreed on a specific interest rate (fixed or adjustable) attached to the borrowing amount. Refinancing involves lowering that interest rate, thereby reducing the amount of money you owe on the principal.
See Refinancing Loan Example #2 below
With lower monthly payments and a reduced interest rate, refinancing can bring substantial long-term savings. Plus, consolidating all your debts when you refinance can make it easier to manage your finances.
See Refinancing Loan Examples below
Is Refinancing Right for You?
There’s a lot to consider when it comes to refinancing. Most importantly, you should understand that it may not be an ideal option for everyone.
Blue Water Mortgage has helped countless homeowners refinance their mortgages and achieve long-term financial benefits. Contact us via the form on this page and we will help you determine if it’s the right step for you. Our loan officers will assess your information, crunch your numbers and get back to you shortly!