The COVID-19 pandemic has caused irreversible economic crises all around the globe, destroying businesses and leaving people penniless. In order to address urgent financial needs, individuals are increasingly choosing to refinance their mortgages. However, the confusion still prevails about when should I refinance my mortgage. In this guide, you will learn how refinancing your mortgage can ensure that you are on a stable financial footing. Keep reading through to understand when to refinance and the associated considerations while making that decision.
When is the right time to refinance your mortgage?
The most common reason why individuals prefer to refinance their mortgage is to get low-interest rates on the new one. However, you also get to avail of lower monthly payments, also leverage the equity in your home to consolidate debt, and much more. Let us dive deeper into the prime reasons to refinance your mortgage:
1. Low mortgage rates
Getting the new mortgage at lower interest rates than the previous one can save a lot of money for the borrowers. Therefore, analyze the interest rates offered on the desired mortgage to figure out if it can be beneficial to refinance right now. Furthermore, if you wish to switch from an adjustable-rate mortgage to a fixed-rate mortgage in order to avoid interest rate fluctuations, you can do that too. Use the refinance home loan calculator to see how lower interest rates can change your monthly payments and make decisions accordingly.
2. Shorter loan term
If you wish to pay off the mortgage early to get off the burden of paying monthly EMIs for the long term, refinancing is the best option for you. Refinancing your current mortgage to shorten your loan term allows borrowers to pay the mortgage sooner. However, you must note that shortening the loan term will eventually increase the monthly payments. Despite higher mortgage payments, individuals save a lot of bucks by reducing the total amount of interest they pay over the complete loan lifecycle.
3. Finance property renovations
Do you wish to make your house a modular property but do not have enough funds for a renovation? Choosing to refinance your mortgage can prove to be the best choice! If you plan to be the homeowner of your property for the next five years and beyond, putting your money into renovations will not go in vain. However, you must conduct a thorough research return on investment to ensure that the renovations will boost your property’s value in the coming years. If all the possible outcomes fall into your favor, go ahead and refinance your mortgage for funding property renovations.
THE FINAL THOUGHTS
While figuring out if refinancing your mortgage will be worth the shot, you must consider all the possible outcomes. Use the monthly mortgage calculator to calculate your new EMIs and how much will you save in the long run after refinancing. This will give you peace of mind knowing that you are on the right track while making significant financial decisions. Connect with reputable lenders and financial advisors to avoid making wrong choices.
