Interest rate fluctuations are as much a part of life as a major car maintenance fix; they are bound to happen at odd and unpredictable intervals. The good thing about fluctuating interest rates is they can fluctuate in your favor. Lisa Johnson with Lisa Johnson Mortgage Services in Prince George has almost three decades of experience dealing with changing interest rates and how they can affect your refinancing decisions for your home. Here are some tips we’ve learned along the way.
THE BENEFITS OF MORTGAGE REFINANCE
- Locking in a lower interest rate. This is the number one reason why people refinance a home. Lower interest rates translates into lower payments, something all homeowners want. Lower payments means more money in your pocket to invest elsewhere, either in mutual funds, 401k, real estate, or a multitude of other investment opportunities.
- Changing the terms. Another popular reason for mortgage refinance is to change the terms of your loan, perhaps from a 30-year loan to a 15-year loan. This allows you to pay off your home sooner and build more equity in your home as well.
- Changing from an adjustable rate mortgage to a fixed-rate mortgage or consolidating a home equity loan. Adjustable rate mortgages have their attractions, but overall, with the unpredictable changes in the free market economy, a fixed rate mortgage is the more conservative and recommended approach for many. Furthermore, if you have a second mortgage or a HELOC (home equity line of credit) loan on your home, you may want to combine the two into one. This could save you money in the long run, not to mention the convenience of just tracking one mortgage payment.
- Cashing out equity. There are many reasons to get some cash out of your home. Debt consolidation is a great reason to get cash out of your home. Paying off debts with higher interest rates such as credit cards with cash from your home saves you a lot of money in the long run. Another great reason to take equity out of your home is to make home improvements, which increase the value of your home–a win-win situation. However, you can use the money for whatever you want such as paying for college, investing in retirement services, or taking that dream vacation to Europe.
WHEN SHOULD I REFINANCE?
Refinancing your mortgage is a bit trickier to predict as everyone’s situation is different. The question you need to ask yourself is will refinancing my mortgage be cost effective? Will I save money in the long run?
The only way to answer these questions is to run the numbers. Consulting a mortgage broker like Lisa Johnson is a good starting point if you don’t know where to begin. With her years of experience and intimate knowledge of market conditions, she knows exactly the calculations to perform to tell you in your situation if it makes sense to refinance. Closing costs are the biggest hurdle in refinancing, which Lisa Johnson can help you calculate as well. However, if you are looking to get a cash out mortgage refinance, the added costs may make sense. Again, consulting a reputable mortgage broker who has your best interest at heart is the best step you can take when considering a mortgage refinance.
Lisa Johnson Mortgage Services knows the Prince George market. With her knowledge of the market, she can help you determine if a mortgage refinance is for you. Contact her today!