One of the options that a homeowner has with any type of mortgage loan is to apply to refinance the loan. Typically the refinancing loan is easier than obtaining the original loan, particularly if there is equity built up in the home and the homeowner has a solid track record of mortgage payments.
There are several reasons to take advantage of lower mortgage rates to refinance on a 30 year fixed mortgage. Often people assume it is only a viable option if interest rates drop dramatically, but this is not the only time that this makes sense.
People that have a 5/1 ARM or an Adjustable Rate Mortgage where the set rate was held for 5 years and is about to adjust often look at mortgage rates to refinance on a 30 year fixed mortgage prior to the original mortgage adjustment. This can help to avoid the suddenly larger mortgage payments if interest rates have risen over the set rate during the set rate period.
By choosing the 30 year fixed mortgage, the monthly payment can be locked in, and there is no adjustment to worry about. Even though there is little equity if any, in the home, there is also a predictability and ease of budgeting for the remainder of the loan.
While the mortgage rates to refinance on a 30 year fixed mortgage will be slightly higher than a 15 or 20 year fixed, it also takes the strain off of the family to meet the higher monthly payments that go along with shorter loans.
The family or individual can still opt to make additional principal payments when financially feasible, but also have the comfort and protection if they don’t have extra to contribute in a given month.
To discuss your options and the mortgage rates to refinance on a 30 year fixed mortgage, get in contact with the team at Guaranteed Rate.