Reasons to Refinance your Mortgage

January 6, 2009
Matt Isleib

 

 

There are many viable reasons to inquire about refinancing your current mortgage

Lowering your monthly payment:  The most common reason we choose to refinance. You have taken a mortgage when interest rates were higher and lowering the rate will lower your monthly payment.

Changing amortization: By far the most common and preferred amortization is a 30 year mortgage. At some point you may want to lower the term to pay the mortgage off faster. Let’s say a 20 or 15 year mortgage. The payments will be more per month than a 30 year mortgage but you will be saving yourself a ton of money in interest by shortening the term

Consolidating debt: It does not always make sense to do this. In some cases wiping out all your credit card debt etc and lumping everything into one new mortgage will lower your monthly payments drastically. But keep in mind you are taking that debt and stretching it over a 30 year time frame. You just need to weigh options if it really makes sense to stretch that debt over 30 years.

Consolidating a First and Second Mortgage: In today’s market this will become less common, mainly because second mortgages are for one much harder to come by. However if you do have a first and second mortgage combining the two of them will sometimes make financial sense. Especially since second mortgage rates are usually higher than first mortgage rates.

Changing the term: If you are in a adjustable rate mortgage and you can secure financing at the same rate or less changing from a adjustable rate mortgage to a fixed rate mortgage may be prudent. And is certainly a viable reason to look to refinance.