What if interest rates drop significantly after you obtain a mortgage? Many people refinance to take advantage of lower rates to reduce their payments or obtain a shorter term loan. Are you ready to refinance? The answer usually depends on your reasons for doing so. There are generally a couple of reasons why you would choose to refinance:

• Reduce your interest rate and lower your payments. This is why most people refinance. Lower interest rates mean lower payments. But you have to weigh the up front costs of refinancing against the potential savings in your monthly payment. A common rule of thumb is to try to recover the cost of refinancing within two years.

For example, if you extend your loan beyond the number of payments you currently have remaining, you could end up paying more interest over the life of the loan. This could offset the monthly payment savings. The decision to refinance usually rests on how long you will keep the property. This could offset the monthly payment savings. But again, the decision usually rests on how long you will keep the property.

• Reduce your mortgage term to pay off your loan faster. When current market interest rates are lower than your existing mortgage rate, refinancing to a shorter term mortgage can save you thousands of dollars in interest charges over the life of the loan. This could be the case even if your monthly payment stays the same, or increases. Your equity will build up faster and your loan will pay off sooner.

Let our Mortgage Officer meet with you and help you decide if refinancing is something that would fit in with your financial goals.