It’s easy to find yourself in a bit of a financial crunch these days, and people looking for a bit of breathing room might be able to find a respite in an unexpected place: Their mortgage loan. We typically think of a mortgage as an expense for obvious reasons, but a home refinance can be a great way to increase your financial flexibility.
At Wasatch Peaks, we’re here to help you with every step as you refinance your mortgage. Why might this process be beneficial for you and your family? Let’s take a look.
The primary benefit of refinancing a mortgage is lowering your monthly payment. The idea of most refinancing projects is to either extend the period of the loan or lock it in at a new, lower mortgage rate (sometimes both), both of which will lower the amount you’re required to pay each month.
In most cases, mortgage brokers recommend refinancing via interest rate reduction as a smart move if the current market is at least two percentage points lower than your original interest rate. Two percent may not sound like much, but it can have a gigantic effect over the life of a larger mortgage.
Easier payments generally leads to a rise in your credit as you can hopefully dig out of any financial hole. You can also use the money you save each month to pay down other debts which might be contributing to negative credit. For some people whose belt isn’t necessarily tight financially, a home refinance can be a great way to build equity by lowering payments but continuing to make the original, larger payment anyway. Some people finish paying mortgages earlier than usual through these methods.
Changing Loan Type
Many people who sign adjustable-rate loans do so as a gamble that their rates might significantly drop through the life of their loan, but often the opposite will happen and they’ll reach a point where they can’t handle the instability of rising rates. Moving to a fixed-rate loan is one of the primary benefits of refinancing, and brings much more financial certainty in monthly payments. Check out our rates here.
Want to learn more about refinancing, or any other part of our loan services? Our financial advisors at Wasatch Peaks are standing by.