Cents of Community: Is it Time to Refinance Your Home Loan?

This monthly column comes from the Arlington Community Federal Credit Union as part of their mission to financially empower the community. Credit unions are not-for-profit member-owned cooperatives and anyone who lives, works, worships, volunteers, goes to school, or does business in Arlington, Falls Church, Alexandria, or Fairfax County is eligible to join ACFCU.*

Your mortgage and home equity products are likely some of your biggest expenses.

With rates being low, many people are finding that it’s a good financial decision to refinance to meet their financial goals. If you’ve been thinking about refinancing, here are some reasons to contact your financial institution:

• You’re ready to consolidate your home loans: If you obtained a first mortgage and an equity loan to purchase your home, you may be able to refinance the two loans into one and lower your overall monthly payments. Equity loan rates tend to be higher than first mortgage rates so you may save on total interest paid over the life of the loan.
• Cash out refinance: Use the equity in your home to pay for major expenses like home improvement, college, vacations or to pay off higher interest rate credit card debt.
• Lower rate and lower payments: Refinance to a lower interest rate to reduce monthly payments and the overall amount of interest paid over the life of the loan.
• Shorten term: To build equity faster, reduce interest paid over the life of the loan. If you’ve owned your home for several years, it may be possible to shorten your term and keep about the same monthly payment.
• Change your product: Many people refinance from an adjustable rate mortgage (ARM) to a fixed rate product.  ARM rates are typically lower and are popular for getting into a home for the lowest monthly payment. However, with an ARM loan, your interest rate and resulting monthly payment will fluctuate over the life of the loan. Many people choose to refinance to a fixed rate mortgage to not have to worry about the interest rate and payment amounts changing.

If you’re ready to explore refinancing, reach out to a financial institution. ACFCU’s real estate team is here to listen and advise you on your best options.

*Equal Housing Lender. Membership eligibility requirements apply. Federally insured by NCUA.