Lower interest rate? Need cash? Refinance your mortgage for the right reasons. Check out these five refinancing opportunities. Lower your payment and make your finances work for you! What are your financial goals? Know those, and you’ll know if and when you should refinance your mortgage.

When interest rates change in your favor, you may want to refinance. More importantly, what’s your situation? How long do you expect to be in your home? What types of financial goals do you have? What kind of mortgage do you have now? Read on to learn more.

1.     Refinance from an Adjustable Rate Mortgage (ARM) to a Fixed-Rate

It’s important to consider what mortgage rates are doing. Are mortgage rates rising or falling? If you have an adjustable rate mortgage (ARM), there is a good possibility it will adjust to a rate that’s higher than a fixed-rate mortgage. If your ARM is ready to adjust or within the next 12 months, now might be a good time to consider refinancing to a fixed-rate loan.

However, you should consider the amount of time that you are planning on being in your home. If you’re going to be in your home for a few more years, it may make sense not to refinance out of your ARM. If you’re going to be in your home longer than seven years, you might do yourself a favor to refinance to a fixed-rate mortgage.

2.     Refinance from a Fixed-Rate Mortgage to an ARM

Again, you need to consider how long you plan on being in your home. Many families and individuals move within the first 7 years so it may not make sense to pay a higher interest rate for a 30-year fixed-rate mortgage when you’re not likely to be in the home that long. Doing so may and sometimes will cost you money. Leanring and understanding your financial goals will help you to determine to refinance to an ARM – you’ll get a lower rate and lower your monthly mortgage payment significantly.

3.     Lower Your Monthly Mortgage Payment

A drop of just one half to three quarters of a percentage point in interest can lower your monthly payment. If you don’t refinance, you may be paying too much every month for your loan, and that’s never a good financial move. There are a few different ways you can lower your monthly mortgage payment.

First, you can simply refinance to a lower interest rate. A lower rate typically means a lower monthly payment.

Second, you can change the term of your mortgage. For instance, if you have a 15-year mortgage, you can lengthen the term to 30 years. Since the balance of your mortgage is spread out over a longer period of time, your payment is lower. However, if you have a 30-year mortgage and one of your financial goals is long-term savings, you may want to consider shortening your term to 20 or even 15 years. Your payment will be higher, but you will pay much less in interest over the life of the loan, saving you thousands of dollars in the long run.

The third way to lower your payment is to refinance to an interest-only loan. Basically, with an interest-only loan, the minimum amount you are required to pay is the amount of interest for a certain period of time, though you can pay as much principal as you like. But you get the option to pay less if you need or want to divert your money elsewhere, such as contributing to your investment and/ or savings accounts, or saving for your child’s college tuition.

4.     Getting Cash from Your Home

The equity you have in your home can act like a savings account that you could access through a home equity loan or a cash-out refinance. This is usually done when you want to finance an important home improvement, pay for college or pay off high-interest credit card debt. Whatever your reason, this may be the right option for you.

5.     Consolidating High-Interest Credit Card Debt

The difference between credit card debt and a mortgage can, financially speaking, mean thousands of dollars. Why? Because unlike your mortgage, the interest you pay on a credit card is not tax-deductible and you pay a higher rate than you would on your mortgage. Because of this, credit card debt is often referred to as “bad debt” whereas your mortgage is considered “good debt.” Using your home equity to pay off your high-interest credit card debt can save you money in the long run. Using your home equity, rather than your credit cards, to finance expensive purchases can also be a smart move. Be sure to consult your tax advisor. Trust us on this. Don’t deduct and just cross your fingers for good luck. Know what you are doing before you mess with your taxes!

Deciding on when to refinance your mortgage will depend on the circumstances of your situation: how long you’ll be in the home, what your financial goals are, whether interest rates are dropping, etc. It’s up to you to decide if it’s right for you.

If you still have questions, please call us at (888) 724-7402 to talk to a refinance expert today. We can help you determine which refinancing option is best for your situation.