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    A mortgage loan refinance is a great way to lower monthly payments and free up much needed cash. In order to determine whether a refinance is right for you, there are several factors to consider. Your Embrace Mortgage Specialist can help you determine whether you should refinance and just exactly how much money you can save each month.

    1. How much will I save on my monthly payment?

    It depends on the type of refinance you’re looking to do. Refinancing to take advantage of a lower interest rate will result in lower monthly payments. The amount you save will depend on your current rate and the new rate.. Refinancing  to consolidate debt can have a dramatic effect on your monthly finances. It is possible to reduce your monthly payments hundreds of dollars a month consolidating high interest debt. It all depends on the amount of debt you are refinancing and the interest rates associated with that debt. Consolidation of high interest debt can strengthen your overall financial position but its impact will depend on your ability to be disciplined and not incur additional debt.

    In some instances the savings associated with refinancing  are so significant that you may be able to also reduce your loan term and still enjoy a monthly savings.

    2. Should I consider a shorter term?

    The loan term you consider will depend on what best suits my current needs and future goals. Everyones situation is different. And at different points in time everyone’s situation may be better served by different mortgage financing options. A shorter term means less overall expense but that shorter term means higher monthly payments. Fifteen-year loans are  a popular choice for homeowners who want to refinance.  These shorter term loans can make sense  for homeowners who have some savings,  stable incomes and family size.

    For some a longer term makes sense. The lower monthly payments permit  you to better deal with  changes in  income, a growing family or unexpected expenses. With a longer term you can always pay off the loan more quickly by making additional principal payments when you can afford them.,

     What is my homes current value?

    Your home’s current value is an important refinancing consideration if you purchased you home with little or no money down. If you did there is a good chance you are paying FHA mortgage insurance. Over the past couple of years many homeowners have enjoyed fairly dramatic increases in their home values. These increases may allow you to refinance into a conventional mortgage with no mortgage insurance required resulting in an additional savings over anything you may save by reducing your rate.

    Whether you’re buying or refinancing, Embrace Home Loans has the answers you’re looking for and the information you need to make the right choice.

    Jon Phillips

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