In cases when the rates are lowered, of course! Nevertheless, though, there is a bit more to the process. Seeing how the rates seriously dropped in recent times, it is only natural that you will be thinking about refinancing. Yet, is refinancing the answer to all of your problems? A lot of property owners actually pick the refinancing option to save more money, yet in the end it could lead to entirely unexpected results. Regardless of whether you want to lower your monthly payment or pay off your mortgage even sooner, you need to consider some important factors in order to make an informed decision that will benefit you in the end. So what does refinancing actually stand for? In case you are refinancing your mortgage, it basically implies that you are planning on paying off your existing loan and replacing it with an entirely new one. There are plenty of reasons why property owners may turn to refinancing. Among the most common ones are the following:
- In order to get a lower interest rate
- In order to shorten the mortgage term
- In order to convert from an ARM (adjustable-rate mortgage) to a fixed-rate one or even vice-versa
- In order to tap into the equity of the property and to finance a big purchase
- Shorten the term of your loan – you will be able to refinance for a shorter term loan. For instance, you will be able to actually switch from a 20-year one to the 10-year one, if you like.
- Converting between the adjustable and fixed rate mortgage. You will be able to switch to yet another program – one with a stable rate or an interchangeable one.
- Tapping into the equity of your property. You will be able to use the equity that you have built into your property to finance yet another big purchase.