The Greenhouse
by Pine

The 4 reasons to consider refinancing your home

Being able to lower your interest rate could end up saving you thousands in the long run.

Is refinancing right for you?

Although rates have continuously increased, it might be worth refinancing your mortgage to save on your monthly mortgage payments or to pull out cash from your home’s equity. 

While it’s always important to do some calculations, to help you weigh the long-term pros and cons, you might find that as you assess your situation, these are some reasons to definitely refinance.

1. You want to lower your monthly payments

If, luckily enough, interest rates have dropped compared to when you first locked in your original mortgage, it may be time to refinance. With a lower interest rate, you can reduce the overall interest amount you’ll have to pay, which means you can potentially also lower your monthly mortgage payments. 

2. Your credit score has increased and improved 

If you’ve recently improved and increased your credit score, refinancing may give you the opportunity to lock in a better rate. In the grand scheme of things, being able to lower your interest rate could end up saving you thousands in the long run when it comes to the interest payments on your mortgage. 

3. You need access to some cash 

Why build equity if you can’t use it when you need it? With a cash-out refinance, you can use the equity you’ve invested into your home to borrow money, at a lower cost. In most cases, while a cash-out refinance can give you access to funds when you’re in a pickle or a tight financial space, most people generally pull equity out to reinvest it back in the home through home renovations or upgrades. 

However, another option to consider if you’re also in need of cash is to apply for a Home Equity Line of Credit (HELOC). 

4. You want to combine your debt in one place

If you have a lot of larger loans and would rather have an easier way to pay, it might be helpful to put car loans, credit card loans, and your mortgage loans all in one place. By consolidating your larger debt, you can combine all of what you owe underneath a debt consolidation mortgage to make your monthly payments easier to manage. 

So is refinancing right for you? 

While there are definitely pros to choosing a refinance, it’s still important to crunch the numbers to ensure you’re making the right decision. In some cases there may be fees involved with a refinance, so if it evens out or still ends up saving you in the long term, it may be something to consider. 

The key is to consider your break-even point. Overall, refinancing may cost you 3% to 6% of your loan’s principal, and potentially mortgage prepayment penalties, so calculate how many years it may take you to recoup those costs and compare them with what you can save with a lower interest rate or shorter term.  

Only refinance if it fits your personal financial situation and goals. But, if you need some help figuring out if this decision makes the most sense for you, fill out Pine’s quick-and-easy online application to get started. We’ll have one of our mortgage advisors get in touch to help you with your refinancing journey.

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