If it’s been a few years since you bought your home in Maine, you might be considering refinancing. Doing so can result in you getting a better interest rate or even a better type of mortgage loan, allowing you to save money and increase your equity sooner than normal. Of course, refinancing is not recommended for everyone. But here are some situations in which it makes sense to refinance your mortgage.
You Have a High Interest Rate
If interest rates were high when you bought your house in Maine, and they’re low now, it might be time for you to refinance. This way, your monthly payments will be reduced, but you will still be paying just as much on the principal as you currently are, allowing you to pay off your house faster. Just keep in mind that refinancing costs money, since it comes with fees, so make sure you will be saving at least more than those closing costs. In general, you should only refinance if you plan to stay in your house for a few more years, or long enough to break even after paying the closing costs. You can find calculators online that will tell you how much you need to save every month to make refinancing a good financial move. You can also contact a real estate agent to discuss your options.
You Want a Different Home Loan
If you bought your Maine house with a loan that’s no longer working well for you, it might be time to refinance so you can get a different one. For example, many people who have an interest-only or adjustable-rate loan opt to switch to a conventional loan at some point in order to save money. Just be sure to research the pros and cons of making the switch, and then talk to an experienced Southern Maine real estate agent to get answers to any questions you have.
You Want to Build Equity Faster
Maybe you have a 30-year mortgage and have no problem making the payments, but are not happy with the amount of equity in your house. If this is the case, you might think about refinancing to get a 15-year loan instead. Of course, if your current interest rate is the lowest you could get, you can always simply pay more of the principal in order to increase equity in your home over time. But if interest rates are lower than the rate you’re locked into, you might be able to refinance to get a 15-year loan without increasing your payments by much, if any. The result is that you can afford to build up equity faster than ever because you’ll be paying much less interest over time.
These are just some of the most common reasons that many Southern Maine homeowners choose to refinance. If you want to find out if you should refinance your home loan, contact us today so we can look at your specific situation and help you make the right decision.