It seems like mortgage refinancing is all the rage these days, thanks to the lowered interest rates that dropped recently. Of course, this major shift in interest rates is part of the efforts to lift the economy amidst the pandemic that has affected the health of millions of people and their finances.
Five Reasons to Refinance
Sure, the lower interest rate is good, but how can you tell if it’s really the best time for you to refinance your mortgage? Your trusted Phoenix mortgage broker shares five reasons you should do so:
- You Get to Enjoy Lower Monthly Payment. This is already a given because of the dropping interest rate (that is, if the rates are lower now than when you took out your mortgage). When you refinance, you can enjoy a much lower monthly payment, but that’s at the risk of resetting your mortgage term. As such, you might want to consider choosing a shorter-term if possible to avoid this.
- You Can Change Loan Products. Perhaps you initially went ahead with a loan product that you weren’t too happy with, and you only had to because it was the only option that allowed you to take a mortgage. Now that you have better standing as a borrower, keep in mind that you have access to more loan options. For instance, instead of staying on an FHA loan, you can choose a conventional loan when you refinance your mortgage. You can say goodbye to that burdensome lifetime mortgage insurance while getting a lower interest rate, too!
- You Can Shorten Your Loan Term. If you are among those homeowners who hate the idea of paying for their home for three decades, you can refinance to get a much shorter term. For example, instead of the 30-year term, you can choose to get the 15-year mortgage term so that you can own your house sooner. Mitch Stam of Desert Springs Mortgage quoted “Depending on what your rates were, this could potentially mean you’ll pay your mortgage faster without draining your savings, thanks to the lower interest rates!”
- You Can Extend Your Loan Term. If you find yourself on the other end of the rope, a refinance is still an ideal solution. If you are currently having difficulties paying your monthly obligation, you might want to consider refinancing and getting a longer-term, so you can enjoy lower monthly payments.
- You Can Go Fully-Amortized. If you are a borrower who is currently on an interest-only (IO) mortgage and a recast is nearing, a refinance might be a smart move. Usually, an IO period lasts for ten years, and then the mortgage has to be paid back in full. If you want to prevent a high monthly payment increase, you can refinance out of the IO loan product and choose one that’s fully amortizing. Of course, there’s also the option to just go with another IO product and, in essence, extend the unique benefit of this product.
Refinancing in Phoenix with Desert Springs Mortgage
Refinancing your mortgage makes sense if you are planning to live in your home for a long time and if it helps you take better control of your monthly payables. If you are able to pay all your monthly bills on time and in full, you’ll be less stressed, and you’ll be on your way to becoming debt-free, too!
What your reliable mortgage broker in Phoenix shared are just some of the reasons to opt for a refinance. However, it’s worth noting that wiping out your home equity for reasons like getting a new car or buying some new stuff that you don’t really need is not a good idea. Refinancing is a big decision that needs careful consideration before you dive into it!
If you are ready to refinance and are looking for a reputable mortgage broker in Phoenix, Arizona, Desert Springs Mortgage LLC is here to help you out. We offer various financing options that you can take advantage of. Contact us at (623) 432-1309 today to find out how we can help you refinance your mortgage!