5 Ways Refinancing Could Be Right For You

1

Swap out an ARM for a fixed-rate mortgage

If you currently have an adjustable-rate mortgage (ARM), you may have seen your loan payments fall and rise. Are you ready for a stable monthly payment, something you can prepare for? You could refinance to a new, fixed rate, if you qualify.

2

Change your loan term

Talk to your loan officer about whether changing your loan term has benefits.

3

Cash out equity

After months or years of payments, you may not realize how much equity you now have in your home. (The average homeowner gained $64,000 in equity during the first quarter of 2022, according to CoreLogic’s Homeowner Equity Insights.*) Your loan officer can tell you when it makes sense to pull that valuable equity from your home and convert it into cash – i.e. if you want to renovate, pay for education or other large expenses, or pay off debt.

4

Scrub down your interest rate

If rates are trending down, you could lock a lower rate than when you first closed on your home loan. Reducing your rate could save more money over the life of your loan. Having a rate that’s a percentage point lower, for example, might shave several hundred dollars a month on your mortgage. Just remember: The potential savings need to offset the other fees associated with a mortgage refinance, such as closing costs.

5

Say goodbye to PMI

If you financed your home without 20-percent down, you may have had to pay for private mortgage insurance (PMI). But if you’ve been paying on your mortgage for a while now, and you’ve paid off 20 percent of your home, you might not need to pay PMI anymore. Once your loan-to-value ratio (LTV) reaches 80 percent, you can talk to your loan officer about removing it.

While refinancing could make a significant difference in the amount you pay each month, there are other costs you should consider. Plus, your finance charges may be higher over the life of the loan. *Sources deemed reliable but not guaranteed.

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