Since we’re in the mortgage industry, our friends and family often ask when they should refinance their homes. We’re going to let you in on the secret we usually tell them, since we feel like you’re our friends and family –– it makes sense to refinance your home if it will save you money or make paying your monthly bills easier.

There’s a myriad of reasons you should consider refinancing, including lowering your interest rate, shortening your loan term, short-term relief from a lower monthly payment, or money to update or fix things in your house. Refinancing can lower your monthly mortgage payment by reducing your interest rate or extending your loan term. Refinancing can even lower your long-term interest costs through a lower mortgage rate, shorter loan term, or both. It can also help you get rid of mortgage insurance.

To help you understand, let’s dig into some of these topics a little deeper. Still, if you want personalized advice tailored to your unique situation, talk with one of our loan officers.

Lowering your interest rate. When market interest rates drop, refinancing to get a lower rate can reduce your monthly payment, lower your total interest payments, or both. You can lower your monthly payment by paying interest on a smaller principal amount, possibly over more years. That said, to access a lower interest rate, you’ll need a decent credit score. To get the best rates, we typically recommend a credit score of 760 or higher.

Accessing your home’s equity. You can access your home equity through a cash-out refinance if you’ll have at least 20% equity remaining after the transaction. Reinvesting that money back into your house and making upgrades can help you increase the value of your home. What’s more, constructing additions to your home or remodeling can help you enjoy the home you love even more.

Getting a shorter loan term. If you refinance from a 30-year to a 15-year mortgage, your monthly payment will often increase. However, not only is the interest rate on 15-year mortgages lower, you will shave years off your mortgage and pay less interest over time.

Mortgages and refinancing can be overwhelming, but with Allied, you have an ally to guide you through it! We’re committed to providing you with expert advice and can walk you through the process just as we would our friends and family. We try to bring a familial touch to the business process!