Is it time to move your mortgage?

This is a paid post contributed by a Patch Community Partner. The views expressed in this post are the author's own, and the information presented has not been verified by Patch.

While the housing market is busy with buyers searching for a new living space, existing homeowners may have the opportunity to improve to their current mortgage structure.

The reasons for refinancing can vary drastically depending on your individual situation. One thing to consider is what you’re achieving by refinancing, and what the transaction is in turn costing you.

For example, you’ll hear and read that it’s usually a good idea to refinance if the current rates are at least 0.5% to 1% lower than what you’re paying. Based on this, someone who is paying 4.5% should clearly benefit by refinancing into a 3.5% interest rate. However, what happens if this homeowner plans to sell their home in six months and retire? They may save hundreds of dollars per month over the next six months, but if they’ve incurred closing costs in the thousands of dollars, their initial investment in the transaction would never be recouped. This is why it’s always important to consider the whole scenario.

Here are just a couple of ways you may benefit from refinancing your mortgage.

Earlier pay-off – If your mortgage is a 30 Year Fixed, a shorter term such as a 15 Year Fixed may be a better option. For some, it makes perfect sense to refinance into a shorter term and pay their loan off quicker, even if the payment increases as a result.

Lower payments – Suppose you took out a 10 Year Fixed when you bought your home but you’re no longer comfortable with the higher payments. In this case, you may decide that you need to stretch the term back out over 20 or 30 years. Since longer term loans typically carry higher interest rates, it could actually make sense to refinance into a rate that is higher than what you’re currently paying. It could give you more time to repay and reduce your overall monthly obligation

Proponent offers a variety of loan products to suit your needs, and minimize your short and long term expenses. Our Advocates are ready to talk you through all of the relevant factors and give you what you need to make the best possible financial decision.

Visit profcu.org/mortgage to see our current rates or profcu.org/membership-eligibility/ for membership information.

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