On Monday of this week, mortgage rates fell to the lowest level on record, giving consumers added incentive to lock in low payments for home purchases and refinance loans.  The average rate for 30-year fixed loans sank to 4.69%, from 4.75% last week, mortgage company Freddie Mac reported Thursday.  That's the lowest point since Freddie Mac began tracking rates in April 1971.  Rates for 15-year and five-year mortgages also hit record lows. 

We all know refinancing can allow us to lower our monthly payment, but are there other reasons and strategies to consider when you refinance.

1. Lower term, same payment: If you want to pay off your home sooner or build equity faster, consider a loan term that will lower your rate and the term (years) of your loan, but leave the payment the same.  This will save you thousands of dollars in many cases, and accomplish your goal of being debt free much faster. 

2. Get Rid Of Mortgage Insurance:  If you had to pay mortgage insurance when you took out your loan or you have an FHA loan with mortgage insurance, you may be able to drop that monthly payment by refinancing.  Your opportunities here are going to be heavily dependent on your appraisal, so try to get some good info from a Realtor regarding value before paying for an appraisal.

3. Credit Situation May Have Improved:  Did you have some credit issues when you took out your first mortgage?  If things have improved or enough time has gone by for those items to be minimized, you may qualify for a better rate or terms for your loan. 

4. Combine 1^st and 2^nd Into One Payment:  We have many calls from people that currently have two mortgage payments that want to combine them into one payment.  That makes it easier, but there is some caution when refinancing for this reason.  Home values in most areas have either flattened or fallen, potentially making your home worth less in the market.  You may have taken out two mortgages to avoid paying mortgage insurance, and trying to combine into one loan without mortgage insurance will be dependent on the home appraising for an amount that shows 20% or more equity position.  That can be risky, so get some good info from a Realtor regarding value before paying for an appraisal.

5. Convert Interest Only, A.R.M.s, or Balloon Loans To Fixed:  If you have one of these types of loans, it may be very beneficial for you to investigate your options to refinance to a fixed rate mortgage that allows you to start building equity and avoid increases to your monthly payment in the future.

The key element in your research is finding a trusted loan professional to help you create a strategy that fits your present and future needs.  Give us a call at 1-888-562-6200.