When to Refinance Your Inland Empire Home

Refinancing your mortgage is something most homeowners consider at least once throughout the lifespan of their home loan. It allows you to pay off your previous loan by applying for a new one that has better financial advantages. While there are many good reasons to refinance, here are five of the most common ones.

Scoring a Lower Interest Rate

The number one reason Inland Empire homeowners decide to refinance is to secure a lower interest rate on their mortgage. Not only does this save you money in the long run and decrease your monthly payment, but you can start building equity in your home sooner. Even though interest rates are currently on the rise, you may still score a lower rate than the one you originally procured when you purchased your property.

Using an Improved Credit Score

Even if interest rates have not dropped in the market, if you’ve improved your credit score over the last few years. Therefore, you may be able to reduce your mortgage rate.

Shortening the Loan’s Term

If interest rates are decreasing, there is a chance you may be able to get a shorter loan term with little to no change in your monthly payment, allowing you to pay off your loan sooner. However, in the current market, that may not necessarily be the case. Even so, shorter terms mean less interest paid over the life of the loan and the quicker you can pay off your Inland Empire home loan. So, it might be worth the extra expense if you can spare it.

Switching From an Adjustable Rate to a Fixed Rate

If you chose an adjustable-rate mortgage with great introductory rates when you initially financed your Inland Empire home, that rate may increase significantly over the years. By switching to a fixed rate when interest rates are lower, you can protect yourself from future increases.

Cashing Out Home Equity

If there is a big purchase or payment on the horizon, such as funding a wedding or going back to school, your best option may be to use the equity you’ve built in your home to borrow money at a lower cost.

Interest rates are expected to continue to rise throughout 2020. In spite of that, some homeowners may still benefit from refinancing right now. Talk to your lender about your options and see if a refinance of your home loan is something that will benefit you.

Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty