Recommendations on When You Should Refinance

Refinancing basically means replacing an existing loan with a new one that has better terms and conditions. In some cases, refinancing can help you save a lot of money in monthly payments or on total interest over the life of your loan. 

However, refinancing isn’t always the right choice because it comes with costs and fees. 

To help you decide if refinancing is the best move for you, we’ve compiled some recommendations to guide you in making the right decision.

When Interest Rates Drop

One of the most common reasons people refinance their existing loans is when interest rates drop. By refinancing your loan, you might be able to get a lower interest rate and, in turn, a lower monthly payment. 

For example, if you have a mortgage with a 6% interest rate and the current rate drops to 4%, refinancing can save you thousands of dollars over the life of your loan. 

However, you need to carefully consider the costs of refinancing, such as closing costs and application fees, to ensure that the savings outweigh the fees.

When You Want to Shorten the Loan Term

Refinancing your loan term might be the solution you need. Shortening the term from 30 years to 15 years, while the monthly payments might be higher, you would be saving more money in total interest over the life of your loan. 

It's important to take advantage of low-interest rates, and if higher monthly payments are doable, you will be making sound financial progress in the long run. This is a great strategy to consider when you want to have a shorter-term loan.

When You Want to Switch the Type of Loan

When it comes to managing your finances, making sure you have the right type of loan can be a big decision. Sometimes, circumstances change, and you may find yourself wanting to switch to a different type of loan. 

Refinancing is a great way to make this switch possible. For instance, if you have an adjustable-rate mortgage and you want to avoid the risk of fluctuating interest rates, refinancing to a fixed-rate mortgage could be the perfect solution. 

Additionally, if you're looking to change your home equity loan into a home equity line of credit, refinancing can help make that possible too. 

So, whether you're trying to secure a more stable financial future or achieve new financial goals, refinancing may be the answer you're looking for.

When You Want to Consolidate Debt

If you're struggling with high-interest debt, it may be worth considering consolidating it into your mortgage to simplify your finances and lower your monthly payments. 

Although this can be a helpful strategy, it's important to carefully evaluate the costs of refinancing and consider the amount of interest you may pay over the life of your new mortgage. 

By doing your research and seeking out advice from a financial expert, you can make an educated decision and take the necessary steps towards financial freedom.

When Your Credit Score Improves

Improving your credit score can have a positive impact on many areas of your life, including your finances. If you obtained a loan when your credit score was lower, you might now be eligible for better interest rates. 

That means you could refinance your initial loan to take advantage of the lower rate and save yourself some money over the long term. With the potential for significant monthly savings and total interest savings, it's something to consider.

When You’re Switching Financial Institutions

Refinancing can be a smart financial move under the right circumstances, but when should you consider it? If you're thinking about switching to a new financial institution, such as switching to the Credit Union of Denver, refinancing could make sense. 

Perhaps you're looking for better interest rates or more flexible payment options. Whatever your reason, don't rush into refinancing without doing your research. Take the time to compare rates and terms, and make sure the new financial institution is a good fit for your needs. 

With careful planning and consideration, refinancing could help improve your financial situation and put you on the path to success.

Final Thoughts

Refinancing can be a smart strategy to reduce your monthly payments, shorten your loan term, switch loan types, consolidate debt, or take advantage of a better credit score. 

However, you need to weigh both the benefits and the costs to make a well-informed decision. Your unique financial situation, goals, and timeline should guide whether or not refinancing is the best option for you. 

Be sure to shop around for the best rates, terms, and fees from various lenders and consult with a financial advisor to help you make the right decision.

How to Adjust Your Home Loan When You Get a New Job

When you sign mortgage papers, you will likely fail to consider what will happen if you change jobs. However, if you find yourself making a career change that results in lower pay, you will need to have your home loan adjusted accordingly. 

Below are a few ways you can adjust your mortgage so that it better aligns with your current income.

Refinance

If you suddenly find that you cannot afford your mortgage payments after beginning a new job, refinancing may be an option. While lenders do not always want to refinance if you have just started a new job, it will depend on several factors. 

Many times, as long as you are still in the same profession, they will be happy to help. Other factors lenders take into consideration are payment history and credit score. 

Maintaining a solid credit score is essential when financing your home. You may even want to consider building your credit prior to starting a new career.

Loan Consolidation

Another option for adjusting your home loan after changing jobs is getting a consolidation loan. If you have other loans, you can find a lender who will consolidate them all into one monthly sum. 

They will typically work with you to give you a lower payment than you currently have. In addition, consolidating your loans will make it much easier for you to keep track of regular payments.

Loan Modification

Most people don't realize it, but it is possible to have your home loan modified if you change jobs. However, this is a difficult task without help because some banks may not be able to assist you. 

If you would like to modify your home loan, contact a loan modification lawyer. Loan modifications can lower your monthly payments and sometimes they can even lower the principal owed.

Chapter 13 Bankruptcy

If you are having problems paying more than just your mortgage after changing jobs, it may be time to consider filing for bankruptcy. Chapter 13 will allow you to keep your home and the equity you have in it. 

You will still be required to pay the mortgage, but other loans will be forgiven. This loan forgiveness could make it easier for you to make your mortgage payments.

There are a variety of reasons that people change jobs. Ideally, they would be switching to a higher-paying job, but that is not always the case. 

This is especially true now that the COVID-19 pandemic is wreaking havoc on the economy. If you are struggling to pay your home loan after getting a new job, don't get discouraged. 

There are steps you can take to adjust your payments. Speak with a financial specialist today to help you make the best decision for you and your family.

How to Decide if It's Time to Refinance Your Home Mortgage

Some homeowners decide to refinance their mortgages for various reasons. Since you already own the property, it is easy to refinance it when possible. However, it'd be best to determine the right time to refinance the mortgage. Here are reasons to refinance your mortgage.

Get a Better Interest Rate

Every homeowner wishes to get a lower interest rate on a mortgage. Refinancing home mortgages is an excellent way to get a better interest rate each month and over the loan term. 

It is possible to get a potentially lower interest rate when you refinance your mortgage. This can save you more money in the long run as you clear the loan because it reduces the monthly payment. 

However, it is worth noting that the refinance interest rate depends on various factors such as creditworthiness and your debt-to-income ratio. So, it'd be best to analyze your current situation to help you make informed decisions before refinancing your mortgage.

A Good Credit Score Rating

If you have a good credit score, you can decide you refinance your mortgage because you stand a chance of getting better interest rates. This is a sound basis that determines whether you get the mortgage or not. 

The lender will analyze your borrowing history and decide whether to give you the loan or not. Even if you didn't have a good credit score when borrowing the loan initially, there are high chances that your score increases with time, meaning you qualify for a mortgage refinancing. 

You will be better positioned to get reasonable rates that reduce your monthly payment over the loan term.

Changes in the Loan Terms

When getting a loan, you either get a short or long-term repayment period. This depends on various factors. But the good news is that you can go for a mortgage refinancing and change the loan terms. 

For instance, you can refinance and get a shorter term from 30 years to 15 years. However, it increases the monthly payment and also saves you money in the long run. 

Clearing your loan sooner will also help you build home equity. So, if you can refinance your mortgage for a shorter term, go ahead and do so because it has excellent benefits.

Following the tips above can help you decide when to go for a mortgage refinancing. Doing it at the appropriate time can save you money and many hustles in the long run. Do due diligence by researching the appropriate information before you apply for the mortgage.