With news that interest rates can be rising soon, many people are looking into refinancing their homes. Refinancing lets a homeowner do a variety of different things but the two biggest are probably the ability such as shortening or extending their loan term and decreasing their monthly payment.
But like with everything else, there are pros and cons when it comes to refinancing. Here are a few examples:
The Pros
By refinancing your mortgage into a new loan with a shorter term (for example going from a 30 year to 15 years) means you’ll gain more equity in the home faster and pay off the loan quicker. That translates into you owning the home free and clear sooner and less interest you need to pay since you won’t any longer have a mortgage.
By refinancing to a lower rate also means your monthly payment will most likely go down. That’s more money in your pocket at the end of the day instead of your lenders, and you don’t have to move.
The Cons
While you may save money with a refinance in the long term, there are also a bunch of up-front fees that come with refinancing that may potentially weaken or negate the benefit.
Refinancing doesn’t just happen by pushing a switch. It takes time and effort to go through the entire process and provide all the financial documents to move it along.
If you shorten the term of your loan to pay the home off quicker, more than likely your monthly payment will increase so that is always something to consider, especially if you are budgeting.
Refinancing is for sure something every homeowner should consider during the time they own a home. It may not be suitable though for everyone. Should you have any questions in helping determine if it is beneficial for you and your family, contact us at Alliant Title and Escrow at 561-912-0922. We would be happy to help.