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KW Coastal And Lakes & Mountains Realty
KW Coastal And Lakes & Mountains Realty
Judy and Bob Holder, KW Coastal And Lakes & Mountains RealtyPhone: (603) 801-4193
Email: [email protected]

"Should I refinance my mortgage?" 3 Common reasons homeowners refinance

by Judy and Bob Holder 11/27/2023

Homeowners refinance their mortgages for an assortment of reasons. Some reasons center around strictly wanting to pay off their homes faster and at better interest rates, while others may fall along practical life events or emergencies. If you find yourself asking, “should I refinance my mortgage,” try checking off a few boxes to help come to a decision.

Here are a few reasons folks may refinance their fixed rate mortgage:

Lower monthly payment

One of the more upfront reasons to refinance a mortgage is to make your monthly mortgage payments more affordable. Some may even seek to reduce their monthly payments by switching their mortgage interest type from an adjustable rate mortgage to a fixed rate mortgage, especially if the interest rates start to creep higher than anticipated.

You’ll want to consider your current loan term against the refinanced loan term to determine if adding extra years or higher principal payments is worth refinancing before jumping into a new mortgage. Sometimes, the monthly savings fall below the lifetime savings of the loan and may not be worth the extra refinance fees.

However, if you find refinancing your mortgage puts you in a great financial place, and you don’t have any large changes in income or expenses coming your way, it may be a perfect time to refinance.

Life events

Sometimes, you may find you want to refinance your mortgage for life events such as weddings, school tuition, large home improvements or other personal expenses. If you find yourself in an emergency, you may also want to consider refinancing.

Regardless of your life event, consult your current mortgage lender to ensure you can refinance without breaking any terms or conditions set forward by the original agreement. If you can refinance, be sure to keep your finances as close to budget as possible, so you don’t end up with more debt or financial hardships than is necessary.

Home equity

After you’ve paid a decent amount into your mortgage loan, and have built some equity in your home, you can borrow more than your outstanding mortgage balance and receive the difference.

For example, if you’ve paid $50k into your current mortgage, with $150k outstanding, and want to refinance for a lower interest rate while getting more out of your home equity, applying for a new mortgage loan may be a great option. You could request $200k while using your home’s equity as a primary component for your new fixed rate loan.

Taking advantage of a “cash-out refinance” or “cash-out refi” gives you $50k to be placed back in your pocket for whatever projects or payments you want to use it for. Meanwhile, your new refinanced monthly payments may stay the same or lower, depending on the lender.

When refinancing your home, be sure to check in with your mortgage lenders. Some will offer you the options you’re searching for without having to switch to a new company that may not have your information on file or may request something deeper.

However, if you find a mortgage lender that checks all of your boxes, try contacting one of their loan officers to explore your options.

About the Author

Judy and Bob Holder

Holder Home Team

I am licensed in both Massachusetts & New Hampshire and Judy takes care of the creative part of things and together we are experts in this local area, we bring a wealth of knowledge and expertise about buying and selling real estate here. It's not the same everywhere, so you need someone you can trust for up-to-date information. We are eager to serve you. Here are some of the things we can do for you:

Find Your Next Home

You need someone who knows this area inside and out! We can work with you to find the right home at the right price for you, including all the neighborhood amenities that matter - not to mention the essential criteria you have for your ideal home

Sell a Home

When it's time to move, you need someone who will advertise your home, show to prospective buyers, negotiate the purchase contract, arrange financing, oversee the inspections, handle all necessary paperwork and supervise the closing. We can take care of everything you need, from start to close.

Consult on Home Selling Tactics

Oftentimes buyers don't visualize living in your home the way you do. We can make your home attractive to its ideal audience - which can help you get top dollar. Things like staging the home, making repairs or minor improvements, or even simply painting the walls can be the difference between a home resting on the market and one that's sold fast.