OnPath Credit Union

The main benefits of refinancing your home are that you can save money and change the terms of your mortgage. Home refinancing may allow you to lock in a better rate, cash out equity or even add a new co-signer or borrower to the loan.

Home interest rates have been fluctuating in the past two years. Although they’ve been trending upwards, there may be scenarios where borrowers have improved their credit scores and may now qualify for more attractive rates. It may be an opportune time to refinance your home. Some borrowers are even afforded the ability to pay off their home loan earlier by shortening the term and locking in a better fixed interest rate.

Pros of Home Refinancing

The pros to refinancing your home are being able to save money with better terms. In some cases, you may have the option to walk away with cash from your home equity.

Upfront Cash

Some home refinancing options allow you to have more cash available if you decide to take on a home improvement or renovation project. Many people consider home refinancing when they want to adjust their budget, and the newfound flexibility that comes with the additional funds can be very helpful if you need to cover a large expense.

Lowered APR

Refinancing your loan can allow you to lower your interest rate with the change. If you have improved credit, you may be able to lock in a better interest rate, and the long-term savings will offset the upfront costs.

You may also have the option to lock in a fixed interest rate to replace an adjustable mortgage rate, potentially resulting in a lowered APR. This may result in a lower monthly payment, which can lessen some of the burdens of a mortgage.

Change Your Loan Terms

• Changing to a longer loan term to lower your monthly payment
• Changing to a shorter loan term to pay off your home faster
• Changing from an adjustable rate to a fixed rate
• Adding a new cosigner or borrower

Potential Cons of Home Refinancing

When you refinance your home loan, you'll have to pay closing costs, which can add up quickly. Additional fees, like appraisal fees and title insurance, may also inflate the extra cost. Be sure to calculate your closing costs and compare them to the amount you'll save long-term to ensure that the savings are worth it.

If you're going to use the extra money to reinvest back into your home, you'll need to assess the investment versus the potential reward. Home refinancing loans have the potential to save you money, but there are still costs associated with refinancing that may outweigh your savings.

It's best to have a clear idea of how much money you are saving and what you will do with it to ensure you do not suffer from the potential cons of home refinancing.

Whether you opt to change your terms to save on your monthly payment or cash out on your equity for some upfront cash, it's wise to consult with a lender whose goal is to get you the most favorable terms for your new loan.

Is It Worth It to Refinance My Home Loan?

If you're looking to lock in a lower rate and you want to potentially change your loan terms, then it's worth considering refinancing your home loan. Situations where it may be worth it to refinance include:

• You have an improved credit score
• Your home value has increased
• You're ready to switch from an adjustable to a fixed rate
• Mortgage rates are going down

The exact amount of savings you are looking for is up to you, but if you have the opportunity to decrease your APR by even just one or two percent, that could add up to thousands over the lifetime of your mortgage.

The most important thing to keep in mind is that you need to weigh the cost of closing against your potential savings.

Get More Favorable Home Loan Terms With OnPath Federal Credit Union

Home loan refinancing helps our members improve their financial situation and offset the costs of homeownership or renovation projects. If you're interested in seeing options for refinancing, give us a call at (504) 733-7274 or contact us online.