Your home mortgage is an important investment in your future, and a mortgage refinance can be a smart move to help you manage your assets when used under the right circumstances. Here are some things to consider about refinancing your mortgage.  

Simply put, when you refinance your mortgage, you are taking out a new loan to pay off your original mortgage, so the first question to ask yourself maybe, is there a better product available to you than what you started with?  

Home Equity

Refinancing allows you to borrow against the equity you have built up in your home and take out cash you can use to pay off other debt, make home improvements, or invest in your retirement. If you have made regular payments on your initial mortgage for at least five years, you probably have enough equity built up to take a cash-out mortgage. For example, let’s say you have $70,000 of equity in your home but still owe $175,000 on your mortgage. You may take out a new mortgage for $200,000, which is used to pay off the first mortgage and then pays you an additional $25,000 in cash.  

We have seen higher than normal appreciation over the last year. So your home’s equity has most likely increased larger than expected. When you tap into your home’s equity with refinancing, you have more options for using that asset.

I know interest rates are rising, but a 5% interest rate is still lower than inflation. It is also lower than what you are most likely paying on credit cards and car payments.

Monthly Payment Adjustment

Another reason to refinance is to reduce your monthly payment to give you more flexibility in your monthly budget. When you refinance, you are starting over on your 30-year commitment. But if you are not taking cash out, your new mortgage amount will be lower, so your payments will decrease.  

If you initially took out a 15-year mortgage, changing to a 30-year term will lower your monthly payment considerably.  

You may also choose the opposite and switch from a 30-year loan to a 15-year term. Your monthly payments will likely increase, but you will pay your loan off earlier and pay less interest over time.  

Changing the terms

Another reason people refinance is to change from an adjustable-rate mortgage (ARM) to a fixed rate. This eliminates fluctuations in your monthly mortgage payment and may help you take advantage of favorable rates.  

Free Home Equity Report

Are you curious how much equity is in your home with our high appreciation this year? Let me provide a Free Home Equity Report for you. Let’s explore your options on how to tap into your home’s equity with a refinancing!

Click Here for a Free Home Equity Report

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