Your finances are always changing. New costs, more income and other changes make your finances an evolving task that you should be managing every day. As your costs and income change, you may find it necessary to change other aspects of your financial management.
Refinancing your home is one way you can restructure your finances to your benefit. Changing up your mortgage may sound risky, but when done correctly it offers numerous benefits.
Why should you consider refinancing?
While it depends strictly on your financial situation and the terms of your original mortgage agreement, there are a few ways refinancing your mortgage could benefit you:
- Lower monthly mortgage payments- by extending a 15-year loan to a 30-year loan, you can actually lower your payments. For example, your monthly payment on a $200,000 mortgage interest rate with a 7 percent interest rate would drop from $1,792 to $1,329.
- Lower interest payments- if interest rates are lower than when you first got your mortgage, you can save a lot of money over the life of the loan. A $200,000 mortgage reduced from 6 to 5 percent will save you over $45,000 in interest payments. That’s a good chunk of change!
- Build equity faster- if your income has increased, you may want to consider making a higher payment or switching to a 15- or 20-year mortgage from a 30-year. This allows you to build equity faster.
- Change loan type- if you started out with an adjustable-rate mortgage, you may want to switch to a fixed-rate mortgage because of the additional security from fluctuating rates.
Is refinancing right for you?
This largely depends on your financial situation and how much it has changed. While it may be the right move for some, staying put with your current mortgage may be better for you.
We suggest speaking with a mortgage lender at Putnam Bank to learn about the benefits and/or drawbacks of refinancing in your particular situation. If it turns out refinancing is the best option for your financial future, our mortgage lenders will help you through the process
Get in touch with Putnam Bank to start the conversation about refinancing today!
Putnam Bank, Equal Housing Lender and Member FDIC