07/23/2020: Five Reasons Why You Should Refinance Your Mortgage Right Now
In recent blogs, I’ve talked a lot about the mortgage process. Finding the right loan for your home is a huge deal! It’s our duty here at Citizens Bank to help you achieve just that, but our work doesn’t stop there.
It’s important to know that the mortgage loan you’ve taken out for your home can, under certain circumstances, be renegotiated. In the home loan industry, we call it mortgage refinancing. Today, I want to talk about the top five reasons why now (as of July 2020) is a great time to refinance your home loan.
Refinancing helps to lower your monthly interest payments
Regardless of when or how you refinance your mortgage, the idea should always be to get a better deal than you originally had. If you’ll recall, in previous blogs I discussed how interest rates are determined. In addition to your credit rating and income level, interest rates are also determined by the current economic environment.
Interest rates are plummeting (as of July 2020) due to the Federal Reserve’s desire to create more favorable economic terms. Current rates are lower compared to those of mortgage deals made even just a few months ago. Should you seek to refinance, Citizens Bank mortgage loan experts will see if you qualify for a lower interest rate.
Refinancing can help to shorten the payment timeline
One of the best reasons to refinance your mortgage is to cut down on the length of your mortgage repayment. Shortening your mortgage repayment timeline can help you save tens of thousands of dollars on interest payments.
Additionally, as mentioned above, by refinancing the interest rate on your mortgage loan, you’ll effectively pay less each month. The idea would be to pay more on the principal each month, rather than the interest.
A home refinance might help to shorten the PMI period
If you put less than 20% down on your home, chances are, you took out an FHA loan, which requires PMI: private home insurance. PMI increases the monthly payments on your home.
However, your house may have appreciated in value since you initially bought it. Furthermore, you may have paid enough equity to cross the 20% threshold. In this case, refinancing allows you to shed your FHA loan—and the private home insurance that comes with it—lowering your monthly payments.
Refinancing might allow you to take cash out
By refinancing for a lower interest rate, you might be able to take cash out against future payments on your home. In a sense, you are taking out some of the money you already paid in.
The best reason for taking cash out against your mortgage loan is to pay debts that have higher interest rates. For example, interest rates on credit card debt can be several times higher than your mortgage loan. Citizens Bank mortgage experts can help you manage your debt service and save you money in the long run.
Get rid of your adjustable rate mortgage by refinancing your home
One of the best reasons for refinancing your mortgage loan is to get rid of an ARM: adjustable rate mortgage. The interest rates for these mortgages fluctuate with the current economy’s prevailing interest rates.
An ARM leaves you susceptible to all economic fluctuations. For example, once the economy begins to recover, interest rates will bounce back up, leaving you with higher monthly payments.
Refinancing your home can kill many birds with one stone
Now is the perfect time to refinance your home loan. With interest rates at record lows, you can lock in a great rate and protect yourself from upward fluctuations. If you’ve never refinanced a home before, it’s a relatively simple process, and our bankers can walk you through every step of the way.
Learn more about refinancing your mortgage with Citizens Bank
Citizens Bank is the oldest, minority-owned bank operating in the United States. Since 1904, we’ve been serving the people of Nashville and Memphis, TN. To find out how you can refinance your mortgage loan, give us a call at (855) 788-4465. For more information, visit www.bankcbn.com or find us on Facebook, Instagram, and Twitter.