When is it a good idea to refinance your mortgage? Refinancing may not be the best solution for everyone, but for some – it could save a great deal of money in the long run.

Here are three reasons to consider refinancing and weigh out your options and costs:

You could lower your monthly mortgage payment. When you bought your home, you were given an interest rate that was determined by your credit score (as well as other factors, but your credit score played a big part). If your credit wasn’t great at the time, you probably didn’t get the best possible mortgage rate. If you’ve made improvements to your credit score and it’s been a little bit since you purchased your home, it’s possible that you could now get a lower rate which would also mean a lower monthly mortgage payment and more money in your bank account every month.

You’re looking to sell in the near future. With a cash out refinance option, your new mortgage would be more than what you owe on your home. This could be useful if you’re looking to increase your home’s value. Making additions or upgrades to your home may also be a good idea if you’re looking to sell in the next couple years. However, keep in mind that you’ll need to pay closing costs again – so be sure to calculate all your potential expenses to see if this option makes financial sense for you.

You could save more money over time. If you’re currently paying on a 30 year mortgage with a higher interest rate, it may be worth your time to try and get a lower rate on a 15 year mortgage, especially if you have no plans on moving in the next several years. Your monthly payment will be higher by refinancing to a 15 year mortgage, but depending on your new rate – you may end up saving yourself more money long term. This is another scenario that you will need to break out the calculator and determine if this is the best option.

Questions about refinancing and if this might be the best option for you? Contact the Loan Department at First Financial, and we’ll help you decide between your options with personalized service.

APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only, are subject to change without notice and may be adjusted based on several factors including, but not limited to, property location, loan amount, loan type, occupancy, property type, loan to value, debt to income ratios, FICO credit scores, refinance with cash out and other variables. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. 

Article Source: John Pettit for CUInsight.com