Mortgages have been the middle class’ path to homeownership since its creation. Although it is better known that these long-term loans are risky since the subprime mortgage crisis beginning in 2008, they have been costing their holders a lot of money for a very long time. One of the best ways to preserve the value of a mortgaged property is refinancing.
Refinancing is a way of creating a new loan or modifying one with a lower rate or principal amount. This reduces a holder’s long-term liability for payments by charging less interest on the same amount or reducing the amount upon which interest is calculated. The difference has to be worth more than the costs of closing on a new mortgage.
Another factor that makes refinancing worth the effort is the length of time a person or family plans to stay in a home. If the plan is selling the home within five years, the benefits of the refinanced mortgage may never make their way into the owner’s assets.
High rates are another good reason to refinance if a new rate would be lower. If a current mortgage’s interest rate is being calculated at 7% or higher, it is probably time to consider refinancing. It is also a way of ditching mortgage insurance when an owner has the equity to avoid it.
Legal representation is a good idea when refinancing on a mortgage is a priority. An attorney can help work with financial advisors and mortgage providers to secure the best rates and the best arrangements for protecting an investment in a home.