At some point during the term of your home loan, you may want to consider a Birmingham mortgage refinance. The process of refinancing your home loan entails getting a new loan and using it to pay off your existing mortgage. Often it can save some money on your monthly payments and give you the option to cash out some of the equity in your home. A refinance option works great if your income situation has changed or you have the ability to reduce your interest rate.
Variables to Consider When Refinancing
If you have a Birmingham home mortgage with a high interest rate, you should seriously consider refinancing when the rates are low. You can often lower your payments by as much as hundreds of dollars per month. Not to mention, the lower the rate, the less interest you pay on the life of your loan which can equate to tens of thousands of dollars in savings. Also, if you have an adjustable rate mortgage, when market mortgage rates are low, consider refinancing to lock in a low rate for the long term.
For persons with a lot of consumer credit (car loans, credit cards or education loans) with higher interest rates, refinancing your Birmingham home mortgage can often allow you to pull out equity to pay off the higher interest loans. This is often referred to as debt consolidation. Taking the equity out and paying off higher rate loans can save you a lot of money. Just be careful not to run the debt back up after paying it off. You can reduce the number of payments, just paying one loan instead of several each month. Also, keep in mind that in most cases, mortgage interest is tax deductible. Please see your tax advisor for professional advice to know exactly what tax deductions you qualify for.
Another variable to consider is the ability to pay off your mortgage early. If your financial situation has changed since you originated your loan, you may have the ability to pay more per month. You might consider refinancing for a shorter term to pay of your mortgage sooner. A shorter term can often save you tens of thousands of dollars in interest.
As you can see, there can be a number of advantages to refinancing your Birmingham home mortgage loan. As with the first time you obtained the mortgage on your property, many variables can affect your interest rate. Your credit history, current debts and assets as well as your monthly income will all have an impact on your interest rate. Also keep in mind that there may be fees associated with refinancing. Fees such as a credit report, loan application fees, appraisal and a loan origination fee. If you have a low rate now, it may not save you money when refinancing. A good Birmingham mortgage broker can help calculate whether or not refinancing is a good idea for you and your family.
There are many great tools available online that can calculate your savings by refinancing. You will need to know information such as your current interest rate and your current mortgage balance. They can often estimate current mortgage rates and run the calculation to show you an estimate for your new payments. At this time, mortgage rates are still pretty low.
Contact your local Birmingham mortgage broker today to see if refinancing your home mortgage loan is a good option for you.
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