Reasons to Refi

You spent several months (or perhaps several years) getting your finances in order, shopping for the right house, and going through the home buying process. There were highs and lows, and it felt like a weight was lifted off your shoulders when you were finally able to rejoice at your loan being closed.

And now it’s time to re-open that book. While it might be tempting to leave well enough alone, NOVA Loan Officers are always watching for opportunities for their clients to receive better rates and/or terms on their mortgages. Here are just a few of the reasons you might want to consider refinancing:

1. Your financial situation has improved. If your (or a co-borrower’s) credit is better now than it was when you purchased, you might be able to qualify for a better rate. Similarly, if your household income has increased, you could reduce the term on your loan by making larger monthly payments. This type of refinance is known as a rate-and-term refinance.

2. Rates have dropped. Though your Loan Officer will be monitoring conditions for you, it’s always a good idea to check current rates. Refinancing with a lower rate can reduce your overall interest and/or monthly payments, meaning you’ll pay less over the lifetime of your mortgage. If your home value has gone up, your LTV (loan-to-value ratio) may have decreased, potentially positioning you for a better rate regardless of current trends.

3. You could use some cash out. Cash-out refinances allow you to borrow money at a low cost using the equity you’ve already built up in your home. While your wish list might be long, renovations are one of the top ways homeowners choose to use this cash out, as they generally increase the value of a home. You could also put this money toward retirement, debt consolidation, and medical/student-related costs. Read more about cash-out refinances here.

4. Your fixed rate period has ended. If your original loan is an ARM (Adjustable Rate Mortgage), you’ll be subject to rate increases after the initial few years of lower payments. While switching to a fixed-rate mortgage might result in a higher rate, it will help you avoid future rate increases. Likewise, switching to an ARM from a fixed-rate loan might be beneficial if you know you’ll be selling within a few years, before the fixed period would end. See the difference between an ARM and a fixed-rate mortgage here.

At NOVA, we know that you put a lot of work into your home. We believe it should also work for you. Never hesitate to reach out to your Loan Officer for professional advice that you can trust will be in your best interest. We’re always here to help!