Everyone’s financial picture is different. For some, refinancing a mortgage might be a way to consolidate debt. For others, it may be a way to pull equity out of your home for long-awaited improvements. There is no magic formula for determining the right time to refinance, however a rising interest rate environment and recent changes to the tax law are spurring homeowners to do their research.
There are a number of factors that go into the decision to refinance. Here are a few things you may want to consider when thinking about your refinancing strategy:
- You’ve gone through a major life event
Major life events, such as marriage, the birth of a new baby, or divorce may be life changing events requiring an evaluation of your financial goals, plans, and future. This includes considering refinancing your mortgage.
- You have equity in your property
The equity in your home may be a great source for funding home renovations or other major projects. Home values have appreciated steadily over the last couple of years by as much as 20 percent and many homeowners are choosing to reinvest in their home rather than purchase a new home.
- You have debt you want to consolidate
If you have high-interest credit card debt, refinancing your mortgage at a lower rate presents the opportunity to reduce your debt even if your mortgage payment increases slightly. Refinancing can also be an option for homeowners who are looking for alternatives to a traditional Home Equity Line of Credit due to the recent tax changes that no longer allow interest to be deducted. If refinancing is something you’re considering, a Rockland Trust loan officer can help walk you through your options.
- You have inherited property
If you have inherited a property along with other heirs and would like to buy the heirs out, you may have the option to refinance into a new mortgage and become the sole owner. In addition, since mortgages cannot be issued to estates, any existing liens on a property will need to be satisfied and estate expenses settled before the estate is distributed. Rockland Trust lenders will work closely with the estate attorney to establish a plan that fits your needs.
Knowing when to refinance can be tricky. An experienced and trusted mortgage lender is a huge help when determining your options for refinancing. When advising you on your home refinance, a loan officer will consider factors like what type of mortgage you have, your credit score, your goals, and more. Here are some refinancing options that you might consider:
- Changing your type of mortgage
According to Rockland Trust experts, we are currently in a rising rate environment.
If you have an adjustable-rate mortgage or ARM, you may want to convert it into a fixed-rate mortgage due to rising interest rates. However, depending on how long you plan to stay in your property, an ARM product may make more sense for your family than a 30-year fixed-rate mortgage, for example.
- Changing the term of your loan
Shortening the term of your loan can save you money in the long run. Your short-term payments will be higher, but long term you’re saving money in the total interest you would have paid. Conversely, lengthening the term of your loan can help lower your monthly payments.
Because the financing of your home is dependent on so many factors, it’s necessary to choose a loan officer you trust with your financial future. The right loan officer will listen to your unique needs and help you evaluate solutions based on your full financial picture and long-term goals. Remember, you want to feel as comfortable with your loan officer as you do in your home.
Let us know how our team of experienced, tenured loan officers can help you as you consider refinancing.
