Home > 2015 > Personal Finance

Why Refinancing Might Be the Right Move for You

Advertiser Disclosure Comments 0 Comments

Buying a home is usually a long-term commitment. Unless you pay in full with cash to get the keys, signing on the dotted line means taking on a mortgage and agreeing to monthly payments for years into the future. Since a lot can change in that much time, you may be in a very different financial situation now than you were when you first negotiated the terms of your mortgage. If you are looking for a way to lower your payments or get your loan paid off faster, you may want to consider refinancing. But before you take the plunge, it’s a good idea to weigh the costs and benefits for your situation. Here are some reasons refinancing might be the right move:

Rates Have Dropped

Since the popping of the housing bubble, interest rates overall have dropped, so there is a good chance you can get a better rate by refinancing. Getting a lower interest rate can mean your monthly mortgage payments will be lower. If you still have plenty of months to go to pay off your mortgage, you may save a significant amount of money in the long run.

Your Credit & Finances Have Improved

Interest rates may have changed, but have you? If you have gotten a significant raise or gotten rid of serious debt since you originally got your mortgage, your credit score has probably improved and you could qualify for a better interest rate (if you want to know where you stand, you can get two of your credit scores for free on Credit.com). Better yet, if you can afford larger payments each month, you could refinance to a shorter term (like switching from a 30-year to a 15-year mortgage) and be finished with your mortgage sooner.

You Want to Change the Terms

Beyond the length and interest rate of your loan, you may want to switch the terms of your loan. You can switch from an adjustable-rate mortgage to a fixed rate if you are looking for more stability.

You Need to Tap Equity

If you need to free up cash, you can use some of the equity you have built in your home and refinance your mortgage to a longer term. This means it will take longer to pay off than you originally planned and you will likely pay more in interest, but it can be helpful if the other expenses in your budget have gone up, your income has gone down or you want to explore some new investment opportunities.

You Want to Consolidate Debt

If you are currently paying back a mortgage and a home equity loan, you can combine the two into one with a refinance. This can make managing your payments easier.

The Break-Even Date Makes Sense

The ultimate test to deciding if you should refinance comes down to how much it will cost you compared to how much you can save. You need to figure out when the monthly savings of your new mortgage become greater than the upfront costs of refinancing. This tells you how long it will take for the refinance to save you money. If it falls within the timeframe you plan on staying in your house, you may want to refinance.

Ultimately, refinancing is a very personal decision that will come down to your specific financial situation.

More on Mortgages & Refinancing:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team