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When & How to Refinance Your Mortgage?
y the time you’ve found this page, you’ve probably
already learned that refinancing your mortgage is more complicated than calling your lender and getting it changed. There’s going to be some paperwork and careful thinking you have to do.
Luckily, we’re here to help. The hassle of refinancing will be well worth it if it’s right for you.
In Santa Barbara, CA Diana MacFarlane is a leader in the mortgage industry. She has earned herself a reputation that gives her connections and insights that you won’t get with anyone else. Diana is a local lender with national lending capabilities.
Let’s go through the basics of why people refinance their mortgage and what are some easy questions to ask yourself to decide if refinancing is for you.
Briefly, to clear up any confusion that might be out there here’s a simple explanation of what refinancing is:
Refinancing is renegotiating your original mortgage so you can adjust what you are paying. You can make adjustments pretty much to everything about your mortgage from the term, to the type of loan and the interest rate.
This is different from taking a second mortgage on your home, Think of this like taking a new, refreshed first mortgage.
There are several benefits to refinancing. You may be able to lower your interest rate to save money. You can get cash out of your home to consolidate credit cards or home improvement or to invest in other real estates.
Exactly how you go about achieving that goal depends on you. Your current financial situation and your long-term plans for your house will make all the difference in how you refinance your home loan.
That being said, the two broad ways that you can save money through refinancing are by:
Lowering your monthly payments.
Paying off your house sooner, saving money in the long term.
These are two very different ways to get the same thing; money in your pocket.
This depends on the current interest rates, therefore contact Diana MacFarlane and her team for a free consultation for the details and options on lowering your monthly payment.
Lowering Your Monthly Payments
Pay off Your Mortgage Sooner
This sentence is going to be extremely counterintuitive but stay with me.
You can increase your monthly payments to save money.
Here’s how it works:
This method is looking at the long term. By renegotiating your mortgage to pay more each month, you will be paying off what you owe faster. In trade, you get lower interest rates and ultimately save a lot of money on the total amount you pay for your house.
That’s pretty much it. Although, the other factors we have mentioned to reduce your monthly payments still stand and the savvy homeowner would take advantage of as many of these saving options as they could.
What’s My Goal?
Clearly, the first step is to decide on what you are trying to achieve with refinancing. Without a clear goal, you can’t get anything done.
So ask yourself, am I refinancing to lower my monthly payments, pay off my home faster, to take cash out so I can use it elsewhere, or to use my equity towards other investments?
Can I Afford It?
Refinancing isn’t all about saving. It’s about balancing your spending with your savings and making sure you still come out on top. So keep in mind that there are closing costs, learn how much they’re going to cost, and decide if it is within your budget.
How Long Do I Plan To Live Here?
How long you have been or plan to be in your house influences some integral factors of the refinancing process. If you are planning to be in your house for at least another 5 years, refinancing can be great. There are certain methods you can use to save money that wouldn’t make sense otherwise. Such as paying for points or increasing your monthly payments to reduce your interest rate. If you are planning on moving within the next 5 years, it might still make sense to refinance, but for very different reasons. Such as refinancing to switch from a fixed rate to an adjustable rate mortgage to possibly save money (fixed rate vs. adjustable rate mortgage).
The specific can get cloudy, but in general, the longer you plan to live in the same house, the more sense it makes to refinance.
Should You Refinance Your Mortgage?
You Decided: Refinancing Is For Me!
Great! Interest rates are still at an affordable range, making it an excellent time to refinance.
But before you go guns blazing, contact Diana MacFarlane and her team who can help you understand the nuances of mortgages and can go to the banks for you to get you the best deal.
If you’re in Santa Barbara or anywhere in the U.S, Diana MacFarlane and her team are the experienced loan consultants that will provide a world-class service.
If you decide to refinance without a loan consultant, then keep doing what you’re doing right now: research. Take your time and find the best deal.
Enjoy the savings (or the cash)!