Since our kid will be going to college soon, I figured that I may have to refinance my home mortgage to have a lower interest rate on my loan, hence, a lower monthly payment. After years of living in a rented apartment, my wife and I, together with our kid, moved into a new home that we bought with a mortgage plan from our bank. We were able to pay off our debt to the bank promptly because the amount we’re paying monthly was reasonable for the income that we’re generating. With a kid in college, we had to think of ways to save more money.
Instead of taking out a home equity loan or home equity line of credit, I decided to refinance my home instead. I did a lot of researching first to determine if that’s the right approach to my need. I found out that I can refinance my home and secure a lower interest rate. My principal and interest payment was reduced significantly thereby saving money for the kids’ education. Many homeowners avail of home refinancing that changed their adjustable-rate mortgage to a fixed rate because of the record low mortgage rates these days. Experts say that it’s worth the money for a home mortgage refinance if the interest rate can be reduced by at least 2%.
I could refinance my home and tap the equity of our home to finance my kid’s college education but I figure lowering the interest rate will be just fine. Some people also refinance their mortgage by changing their mortgage’s term. When interest rates go down, they avail of home refinancing that changes the loan’s term, from 30 years to 15 years for example, with little change in their monthly payment because of the low-interest rate that they’ll be getting after the home mortgage refinance. After our kid’s college graduation, I may have to refinance my home like that and be able to pay my mortgage and own our home faster.
Of course, just like anyone else, I was thinking should I refinance my home and when can I refinance my home. The answer to the first question is yes, I should because I have a solid reason to finance my home; my kid’s education. That’s what the experts also advise, that you should have a valid reason and need, not to buy a car or go on a vacation, if you’re thinking of home refinancing. The question of “when” as I learned is that many lenders will not let you refinance if you have had the mortgage for less than 12 months.
Some pitfalls and mistakes may happen to the unaware and they have happened to a lot of people. That is why I carefully study things before decided to refinance my home. I found out that once I was able to secure a lower interest rate, I should have the agreement in writing. You should carefully study everything that you can before entering into a refinancing agreement because our home is at risk. However, home refinancing can be a valuable tool that you can use to help you out in those times that you need them the most.