One of the most common reasons why you would want to refinance is because you can lower your monthly mortgage payment. A number of reasons exist why a refinance will do this, the most common being a lower interest rate, but that’s not the only one. Here are a few reasons how you can lower your monthly payment:
- Lower Your Interest Rate. A lower interest rate can substantially reduce your monthly obligation towards your mortgage payment. A small reduction in your interest rate will yield thousands of dollars in savings over the life of the loan. Interest rates are still at historical lows. Compare rates today by using the Box Home Loans Rate Engine to get a quote in seconds.
- Remove Mortgage Insurance. If you originally financed your home with less than 20% of a down payment, you likely have mortgage insurance you are paying in addition to principal and interest. Refinancing now that you have more equity can remove that additional cost and reduce your monthly payment.
- Change from FHA to Conventional. FHA Loans are great to get into a home with less of a down-payment. You might be surprised to see how much money you could save each month by refinancing to a conventional loan now should you have the equity in the home to do so.
- Change The Terms of Your Mortgage. If you have 20 years left on your loan and you refinance to a 30 year loan, you will have lower mortgage payments as you will be borrowing less for a longer period of time.