Mortgage St. Louis – Should I refinance?
When the value of your home rises or the interest rates drop is the ideal time to refinance your mortgage.
Refinancing your mortgage simply means that you have found a better deal on a home loan, and want to use those terms and rates to pay off your existing mortgage. You may be curious about the advantages of refinancing your home, or be ready to get locked into a rate. Either way, Sean Z will be by your side to walk you through the process from beginning to end.
Sean Z and company will help you decide if refinancing your home now is the best financial path for you. We will work with you to determine what your goals are and help you choose which refinance mortgage will help you meet your needs.
When is it a Good Time?
When the value of your home rises or the interest rates drop is the ideal time to refinance your mortgage.
If done right, refinancing your mortgage can lower your monthly payments, reduce the total amount owed to the bank or make good use of the equity you have built into your home. Sean Z will discuss all of the highlights and pitfalls of refinancing to figure out if it is the right choice for you.
If falling interest rates are your motivation for considering refinancing your home, you have two options on how to take advantage of that.
- You can lower your monthly payments and keep your current repayment terms.
- You can keep your monthly payments at the same amount and shorten the length of your mortgage.
After speaking with the Sean Z Mortgage Team at Better Rate Mortgage about your long term goals and short term needs, you will have a clear understanding of which option is best for you.
You may also consider refinancing if the value of your house has made a significant increase. This is a good time to refinance the mortgage and consolidate your other debts. Sean Z can explain to you how the equity you now have in your home can be used to pay off other loans or and high interest credit card debt. You can even use the extra money on home improvement projects, further increasing the value of your house.
What are the Reasons to Refinance?
If your monthly mortgage payment is leaving you strapped for cash, a refinance loan will be useful. If you make the choice to refinance with new terms and a lower rate, you reduce the monthly payments. You are starting from the beginning of the loan again, but this time it may be easier to handle with more cash left over at the end of the month.
Long term planners like the idea of refinancing to change the terms. If the monthly payment is within your budget, you can choose to refinance to shorten the length of the loan. This saves you thousands of dollars in interest fees and frees up equity faster allowing you to walk away with more cash in your pocket if you decide to sell before the loan is finished.
What is the Loan to Value Ratio?
The loan to value ratio is used to determine the percentage of your loan in comparison to the value of your property. This ratio will have a direct affect on how much a lender will be willing to offer you in a refinance mortgage. To give you an example with simple numbers, let’s pretend your home is appraised at $100,000 and you still owe $50,000. 50,000 is 50% of 100,000 so your loan to value ratio would be 50%. The lower the ratio the better when being considered for a refinance mortgage.
Sean Z and his mortgage professionals will help you figure out your loan to value ratio to see if refinancing your home now is in your best interest.
What Types of Loans Can I Choose From?
Fixed-rate mortgages are consistent with their interest rate for the entire life of the loan, while an adjustable-rate mortgage can change with the market, typically after 5 or 7 years. After that the rate will change on scheduled adjustment dates making it difficult to predict how much of your budget will be affected.
Sean Z will help you understand why the deciding factor between a fixed rate loan and an adjustable should be your long term plans regarding the house. If you plan on entertaining your grandkids there than go with the stable fixed rate, but if you think you will be selling in a few years then the adjustable loan will allow you to enjoy the benefit of low interest in the beginning and avoid the possibility of high interest payments once the 5 year period is up.
You have a lot to consider when thinking about a refinance mortgage. Sean Z would love the opportunity to help you weigh your options to make sure you get the loan that is going to work best with your needs.