What has your COVID experience been like? Some people have done very well and others have seen their jobs and livelihood swept from under their feet. In either scenario, you might want to consider the benefits of refinancing your mortgage.
We like to think of mortgages as set products and that we'll have to continue paying them off for the rest of our lives. But they're not. Since mortgages are at a record low now could be a good time to change your terms.
Here's everything you need to know about the benefits of refinancing mortgages.
Adjusting Because Times Are Good
If you have an online business or you invested in shares of companies like Zoom before the crisis then you're probably flying ahead right now.
If that's the case then you probably don't want to be paying back your mortgage at the same rate you are now, racking up interest.
Yet at the same time, it might not be convenient to clear your mortgage with one lump sum.
You can negotiate a change to your mortgage terms and replace it with a new mortgage that allows you to pay off your debts at a quicker rate for less interest. This might mean higher monthly payments in the short to medium term but in the long run you will clear your mortgage faster and with less interest.
Better Interest Rates
Another way of refinancing your mortgage is to try to negotiate on the interest payments. You might find that the interest is too burdensome as you want to take out another loan.
You can offer many things to get these interest payments down. You generally need a lot of equity or you could offer a lump sum. This is not the same as paying off your complete mortgage but a significant down payment. Given the unprecedented nature of the crisis, this could work in both your favor and the favor of your lender.
A lender might want the cash now to help them stay afloat as many people lose their jobs and have to default on their payments. This is one of the many benefits of refinancing your mortgage.
And you might want want to get rid of any extra cash you have in the bank, worried about the fluctuating dollar in the months to come and as we approach a crucial election period. Investing in property is usually considered a safer bet.
Longer to Pay but Higher Interest
If you've been hit hard by the crisis then you might want to lower your monthly payments. If you're due to pay off your mortgage in the next ten years then you might want to expand the terms of your mortgage.
If you take longer to pay — moving from ten years to fifteen years — then your monthly repayments will reduce.
The downside is because you are paying back your mortgage over a longer period of time you will have to pay more in interest payments.
There Are Many Benefits of Refinancing Your Mortgage
If you are considering the benefits of refinancing your mortgage vs the downsides of doing it then you should consider your personal circumstances at the moment and where you think you will be in 10 or 20 years' time.
Be sure to check out the rest of our site if you want to learn more about mortgage rate increases or the benefits of refinancing. Visit the Real Estate, Finance, and Loan sections to learn more about mortgages and refinancing options.
