Most homeowners will have at least one existing mortgage and some homeowners may even have additional mortgages on the property. As interest rates on mortgages change over time and due to market and economic influences, the original mortgages may not always offer the lowest possible interest rates.
When the current mortgage refinance interest rate is lower than the original mortgage rate, refinancing may be an important consideration. Not only can a lower interest rate be offered through the refinancing process, but you may even find you can pay off the home faster, resulting in less total interest paid over time. It is also an option to access equity built up in the home to access capital.
Additionally, with equity built up in the home and a positive credit history, a homeowner may also be able to take advantage of an improved mortgage refinance interest rate to turn a variable rate loan into a fixed loan, which will also have long-term benefits.
When to Refinance
There are several factors to consider in addition to the current mortgage refinance interest rate. Keep in mind that there are costs associated with this option, so the decrease in monthly mortgage payments or the access to equity has to offset these costs, or the refinancing will end up costing you money.
In some cases, there may be significant penalties involved in the early payment of the existing mortgage. Even with typical mortgages, there will be an early payment penalty, so it is important to read the terms of your current mortgage and use an accurate calculation to determine the net result of the refinance option before getting started.
A top mortgage company will assist you in reviewing your options and understanding the benefits and the possible drawbacks to a refinance. Taking the
time to consider all of these options will help you to choose the correct timing of the refinance to work in your favor.
To learn more about the current mortgage refinance interest rate and to discuss your refinancing options, talk to the mortgage experts at Guaranteed Rate.
