Is now the right time for you to refinance your home?

You might have heard some buzz about refinancing your home, but what exactly is refinancing? And, how do you know if refinancing your home is right for you?

What Is Refinancing?

Refinancing refers to the changing of the terms of an existing credit agreement, such as a mortgage. Through refinancing, you seek to secure a favorable change in the terms of your loan, like a lower interest rate or a more favorable payment schedule.

How Could I Benefit from Refinancing?

Depending on what kind of adjustment you make, there are various ways you can benefit from refinancing your home.

• Take advantage of lower interest rates by switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. 

• Shorten the life of your mortgage from a 30-year to a 15-year loan, which will typically mean higher monthly payments, but less in interest over the life of the loan.

• Lengthen the term of your loan. You’ll end up paying more interest in the long run, but you’ll have lower monthly payments that might better suit your current needs.

• Through the equity you have built up in your home, free up cash to pay off other debts or pay for home renovations. Or, cash out your equity and add that money to your retirement investments.

When Should I Refinance?

A financial professional can help you determine the answer to this question, but generally speaking, the following circumstances can be good indicators.

• Your credit score has improved. In this instance, you might be able to secure a lower interest rate.

• You are nearing retirement. If you want to refinance, it might be best to do so before you retire. 

• Current interest rates are below your current mortgage interest rate on your mortgage. 

• Your financial situation has changed and you want to lengthen or shorten your loan term and/or adjust your monthly payments.

What Are the Drawbacks to Refinancing?

Refinancing generally results in long-term savings, but since refinancing requires closing costs, like when you first took out your loan, you’ll have to determine whether the upfront cost is feasible for you and worth what you’ll save in the long run. You’ll also need to determine whether the actual savings resulting from the refinance will be significant enough to warrant the effort it requires.

If you are considering refinancing your home, schedule an appointment with the office. We can help you determine if now is the right time to refinance your home. 

^{This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.}

^{Cetera does not provide tax or legal advice}