Want to Make Mortgage Payments More Affordable? Refinance!
If you want to make mortgage payments more affordable, refinancing your mortgage could help. Refinancing can be the right decision whenever you want to restructure your finances, pay off debts, or simply want to save more money.
Lower interest rates are often the primary motivation for refinancing. This is because it can both make mortgage payments lower and lower interest costs over time. However, there are also many other motivations. Your needs and personal priorities should compel decisions on how to refinance.
- Cash out: This allows you liquidate some of the equity in your home, which can give you access to a potentially large lump sum of money, but comes with drawbacks. If you are refinancing and you elect to take “cash out” in addition to an existing loan, the new mortgage balance will end up being larger than your original mortgage. So once your refinance is complete, the new loan will consist of the current balance plus the desired cash-out amount, which means that both the size of your mortgage and your mortgage payment will increase in return for this infusion of cold, hard cash.
- Consolidate two mortgages: Combine two mortgages from two properties into one mortgage is possible. If you were to pursue this it would leave a large mortgage on one property and the other property mortgage-free. One of the drawbacks is that you would need one property with enough equity to support the combined balance of the two mortgages. Additionally, your new loan would be considered a cash-out refinance and likely have an increased interest rate and stringent lending guidelines.
- Faster mortgage payoff: If you can afford higher payments, this might be the option for you. If you supplant your 30-year term with a 15-year mortgage term, you would definitely be out of debt sooner, and you wouldn’t need to double your payments to do so. Payments may escalate by as much as 40% if each loan has a similar 6% interest rate.
- Lower payments: It can be tempting to refinance when rates fall, but a two-point drop in rates is typically the minimum change that will make it worthwhile. However, if you have a $250,000 balance on your mortgage, a rate reduction of even 1% can lower the monthly payments by a couple hundred dollars and reduce long-term interest expenses by hundreds of thousands.
Overall, there are two things you need when you decide to refinance your mortgage:
- The right information; and
- The right mortgage professionals
Unfortunately for many, getting access to the two can be difficult. By providing you with the latest mortgage-related news and information, a mortgage professional can help boost your confidence as you involve yourself in the complex loan process.
Getting the most advantageous terms from the lenders or banks should not be a hit-and-miss activity. Bad credit scores notwithstanding, there are many lenders/banks out there that are willing to work with you.
Chicago Mortgage Spot’s Simple 4 Step Process:
- Start by filling out our super short mortgage quote form (under 2 minutes). It is 100% Secure and we ask for NO Confidential Information Upfront.
- We match your request with a participating lender typically matched for loan type and credit type.
- You receive a follow up email and phone call in 24-48 hours for a brief consultation, discuss loan options and hopefully get pre-approved.
Refinancing is not right for everyone with a mortgage, but it could work for you if you hope to make mortgage payments more affordable. For more information about refinancing, mortgages, home equity loans, and credit reports, contact Chicago Mortgage Spot today!