Refinance Your Mortgage for Long-Term Savings
The recession is over and new federal lending guidelines have helped to make monies available again to the public. One area that seems to be thawing is real estate. Some areas are starting to see a small rise in housing prices, even though over a quarter of people still are underwater on their mortgages. The good news is that as prices rise, the loss of equity is restored. For all homeowners, it might be time to look at refinancing your home mortgage to take advantage of lower rates, especially if you can’t sell and expect to stay in the home longer than five years.
Refinance to Fixed Rates
Fixed rate mortgages right now are a bargain. As inflation kicks into all sectors, from gas to food, it will also eventually hit rental properties. Those people who own their home with a fixed rate mortgage will have effectively secured a hedge against inflation. It will also help to keep monthly payments low, unlike an adjustable rate mortgage payment that can rise over time.
Refinance to a Shorter Term
Even if you don’t need to refinance since you have a low fixed rate already, there is still a good reason to do it. By refinancing a 30-year mortgage to 15 years you can end up paying your mortgage much quicker and paying less in interest over the life of the loan. This can end up saving thousands, if not hundreds of thousands, depending on the price of the home. If you think you are in great financial shape and can withstand an increase of a couple hundred or more on your monthly payments, it is a good idea to lock in the lower rate for a shorter term and really save a lot of money in the long run. As with all mortgages, make sure you understand the terms of your loan and how it will help or hurt your own financial situation to change it now.