How Does Buying a Foreclosure Differ from a Traditional Sale
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
1. Refinancing Can Lower Your Interest Rate or Monthly Payments
One of the most common reasons homeowners refinance is to lower their interest rate, which can reduce their monthly payments.
How refinancing helps:
- A lower interest rate means less interest paid over time, saving you money.
Lower monthly payments can free up extra cash each month for other expenses.
Before refinancing, make sure you compare the current interest rates with your existing loan to determine the potential savings.
2. Refinancing Offers the Flexibility to Change Your Loan Terms
Refinancing isn’t just about lowering your interest rate—it’s also a chance to adjust your loan terms to fit your financial goals.
Options available:
- Shorten your loan term: If you can afford higher monthly payments, you can reduce the length of your loan (for example, switching from a 30-year to a 15-year mortgage). This can save you money in the long term by paying off your home faster and reducing interest costs.
- Switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage: If you’re concerned about rising interest rates, refinancing to a fixed-rate mortgage offers the stability of consistent payments.
Refinancing gives you the flexibility to make changes that better align with your financial situation.
3. Be Aware of Closing Costs and Fees
While refinancing offers potential savings, there are closing costs and fees that come with the process.
Costs to consider:
- Application fees, appraisal costs, title fees, and other charges can add up to thousands of dollars.
It’s important to calculate if the savings from refinancing (lower interest rates or payments) will outweigh these costs.
Do the math: To determine if refinancing is worth it, calculate how long it will take to recoup the costs of refinancing through your monthly savings. If you plan to stay in your home long enough to make up the difference, refinancing could be a great move.
Ready to Refinance? Let’s Help You Make the Right Move
Download our free “Refinancing Your Mortgage Guide” — includes tips on calculating savings, understanding fees, and making the best decision for your finances
Chat live now if you have questions about refinancing or want to explore your options
Schedule a call with a Stairway Mortgage advisor to see if refinancing is the right choice for your financial goals
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