If you are the recent purchaser of a new home, congratulations on a very intelligent investment. You have joined the over 65% of Americans who are fortunate enough to own their own home. It is the American dream to get a great job, raise a family and live happily ever after. Home ownership doesn’t stop with the purchase. There is continuous maintenance that is required to go into owning a home. Unless you make a significant amount of money, home repairs and emergencies can become very expensive. More expensive than most home owners are prepared to deal with. It’s hard to imagine where you can turn when you are confronted with an unexpected financial crisis.
Great news for you! You are not the only one and there has been countless research as to how you can best leverage your hard owned property to get you out of financial binds. Many homeowners aren’t even aware that is an option. According to phys.org(1) , Americans homeowners missed out $5.4 billion in potential extra money because they did not refinance their home mortgages. When interest rates were on the decline, more than 20% of homeowners would have benefited from a mortgage refinance, but for whatever reason, they did not look into their options. There is a fundamental problem with homeowners paying too much for their mortgages and they hold the power to do something about it.
Take a look at these amazingly smart reasons to refinance your mortgage:
Interest Rates Have Gone Down
Interest rates dropping is amongst the top reasons why homeowners refinance. That doesn’t just apply to mortgages, but any kind of loans. Interest is how much you’re going to end up paying for the loan over the life of the loan. So the lower the interest rate, the better. If you are a first time home buyer, you may not have received the best rate initially depending on how your down payment and credit looked. When interest rates drop, that’s the best time to get the rate you feel you deserve and will put some more money back in your family’s pockets. The White House estimated homeowners saving an average of $3K a year by refinancing.
Your Credit Score Has Gone Up
If your credit score isn’t hovering around the 700+ realm, chances are you didn’t get the best interest rate on the market. Because of the 1.5% variance in many rates and programs, even if rates have not dropped, you can still save your family a lot of money by refinancing to a lower rate. A higher interest when your credit score jumps to a place where you’d qualify for a much better rate, could cost you hundreds of dollars every month, equaling out to tens of thousands of dollars over time. Check your score regularly to make sure your score is on the appropriate trajectory upwards. If you see anything that may be holding you back, address it right away.
You Need To Lower Your Monthly Payment
Circumstances in life are consistently changing. That’s one thing we can count on. The consistency of change sounds like an oxymoron, but ironically something we can count on. When you first buy a home, you may not have as many bills. Maybe your score wasn’t great so your interest rate was a bit painful. If you find yourself in a challenging position due to bills and other financial obligations, refinancing to lower your monthly payments may be a great idea. You can always consolidate all of your bills into the mortgage to lower your overall monthly outgo and put more money away for the things that matter, like family and fun.
To Convert An ARM To A Fixed Rate Mortgage
If our current political climate has taught us anything, it’s that the market is very volatile and can move dramatically with a sneeze. This can become very nerve wrecking for families with ARM mortgages. ARM stands for Adjustable Rate Mortgage. You can imagine anything that can adjust with the market may not be ideal over time, especially when trying to establish some type of consistency with your finances. The rates are great initially, but once they adjust, you can see dramatic increases in payments. In some cases, unaffordable payments. Refinancing your adjustable rate to a fixed rate can save you hundreds of thousands in interest over the life of you loan. It offers a great piece of mind to know your mortgage payment cannot change if we decide to go to war as a country and our economy takes a hit. These are very real concerns in our current economy.
Call your local credit union or financial institution of choice to get started on your refinance today. There are many sites that will get you started and help you get an idea of what your finances will look like if you decided to refinance. Don’t wait and start saving thousands today!