When asking this question, consider your goals. Do you want to stabilize your budget with a fixed monthly payment? Do you want more cash flow in your budget? Do you want to pay off your mortgage sooner? Do you need to better manage your debt?
Refinancing can provide you with options to achieve these goals.
Consider how these different refinancing options can help your situation:
- Obtain a fixed monthly payment. If you currently have an adjustable-rate mortgage, a fixed-rate mortgage will give you a predicable payment that won't change over the life of the loan.
- Free up cash. A longer-term mortgage can reduce your monthly payment. Also, securing a lower interest rate is a great way to reduce your monthly payment, which allows for greater cash flow.
- Pay off your mortgage sooner. By reducing the term of your mortgage, you will speed up your loan payoff. However, keep in mind that this option may also increase your monthly payment. The advantage to a higher monthly payment is that you can build equity in your home more quickly.
- Manage your debt. A "cash-out" refinance option allows you to borrow against the available equity in your home. Sometimes the interest rate on a cash-out refinance can even be lower than the interest rate on a home equity loan.
Refinancing can potentially help improve your financial situation and give you and your family more freedom. However, every situation is different, so contact us today to discuss your financial situation and determine whether refinancing is the best option for you.