The Power of a Fixed Refinance is in Your Hands
Looking for something unwavering and just stays with consistency? You might be looking at a slice of pizza from your favorite local mom and pop store. The same great sauce, cheese, and toppings that reminds you of great times as a kid. A fixed-rate refinance gives you comfortability in the sense your rate won’t go up or down and you can really set a budget. This is great because you can always plan how to spend your money and learn how to save down the road. Having a stable income will ensure that you get the most out of your refinance. Here’s some information to help you along the way.
What is a Fixed-Rate Refinance?
Fixed-rate refinance is typically a 15-30 year mortgage that has rates that stay the same over time. Unlike an adjustable rate mortgage, it’s not dependent on the market changes. You won’t be bombarded by a new rate that will force you to become delinquent in your mortgage because you’re unprepared for the new rate cap. This level of consistency can help you gauge when you’ll actually be able to pay off the loan because the interest is included in the amount. This can be very beneficial long term. Also giving you the option to pay out a higher mortgage to reduce the length of the loan.
Advantages of Fixed-Rate Refinance
One of the main advantages of having a fixed-rate refinance is the stability. Many homeowners love the fact that their mortgage and interest stays the same throughout the duration of the mortgage. It’s very straightforward and what you see is what you get. Almost like asking your grandmother for advice on certain life lessons. She’s been there and done that and will hold no punches even if it may hurt your feelings. You need that type of stability in your life when everything else constantly changes. A fixed-rate gives you the chance to set a budget and stick to it for a long period of time unless you decide to switch to an adjustable rate mortgage or interest only kind of situation. With that being said, the market rate has no effect on your mortgage and interest. For a lot of people, this is a bit of a relief. The housing market crash has rates going up and down like a haywire elevator. If you plan on staying in the home for a long period of time, you’ll be able to pay off a lot of the principal balance from the jump. Also, you may build tons of equity which you can use later for personal reasons.
Cons of Fixed-Rate Refinance
Remember, this is a fixed-rate situation. The bad thing about this specific method is you won’t be able to take advantage of interest rates decreasing in a market change. In an adjustable rate mortgage, this can save you thousands of dollars. This is a significant amount of money you would be able to use towards other things outside of your mortgage. Another disadvantage is the rate may be higher than an adjustable rate. In a worst case scenario like losing your job, it’s going to be hard to keep up with payments. Even if you can refinance, there’s no telling how far down the drain your debt will plummet. Save some money and really stick with a budget for a while before you begin making expensive purchases. Financial security is key!
Always keep a look out on reputable lenders who will give you good advice on a suitable situation for your income. Do your research on different rates that you know you and your spouse can afford. Before you refinance, save your money in case of hard times.