February 14, 2022

Refinancing to a higher rate could still make sense.

While it's tempting to hold on to an impressively low interest rate, it may not be the best decision. Household budgets are complex and nuanced. The long-term cost of your mortgage is only one consideration.

If you have a really good interest rate, but your monthly budget still feels a little bloated, a Boles Group lending professional can review your financial situation, work with you to define your big-picture goals and suggest a mortgage solution that makes the most sense for your individual circumstances.

A refinance won't always be the best option, but here are just a few cases where a refinance might be a good choice (even at a higher rate).

Remove mortgage insurance. Quickly rising property values allow home owners to drop their PMI payments much sooner than expected.

  • Apply the extra money to the loan principle every month.

  • Save it and avoid using credit on your next vacation or large purchase.

  • Use the money to pay down your auto or student loans.

Convert equity to cash. Think of it like selling your house to yourself. You borrow up to 80% of the current value of the home with a brand new mortgage. Once the original loan is paid off, the rest of the money is yours.

  • Pay off high-interest credit cards.

  • Get rid of medical debt, student loans or back taxes.

  • Put in a pool, buy a car or take a vacation!

Change the loan term. Although interest rates are on the rise, refinancing to change the terms of the loan could still benefit many borrowers.

  • Lower your monthly payments by refinancing a 15-year loan to a 30-year loan.

  • Lower your rate after improving individual risk factors (Credit, DTI, Etc.).

  • Avoid a balloon payment by refinancing to a fixed-rate mortgage.

If you aren’t sure if a refinance is a smart choice for your circumstances, call the Boles Group at Bay Equity Home Loans in Gilbert. A licensed Boles Group loan officer will review your current financial situation, find your available options and help you come up with a plan to help you reach both your short-term and long-term goals.