Refinancing your Kansas City mortgage rate can be a money-saving move, but not for every situation. Refinancing to a lower rate makes good financial sense, but sometimes getting the best rate leads people to borrow more money than they need. Therefore, it is important to understand your options when you refinance your Kansas City Mortgage Rate.
Only Refinance Your Mortgage Once
Ideally, you only want to refinance once on your current mortgage. Refinancing your Kansas City mortgage rate multiple times can reduce the overall financial value you receive. Many homeowners easily fall into the trap of repeat refinancing. This can result in:
- A larger mortgage
- Paying more interest over time
- Pushing your mortgage-free date further into the future
Only Refinance for Long-Term Investments
Before you make the decision to refinance, you need to determine what you want to accomplish by doing so. Refinancing does not pay off your existing loan; it changes the current structure of your financing.
Typically to benefit from refinancing, you have to keep your house for a while. If you are going to move in the next couple of years, this option is most likely not a good idea for you. The costs of the process will outweigh any benefits you will see in the short term.
Convert from an Adjustable Rate to a Fixed Rate
Some people choose to convert their Kansas City mortgage rate from an adjustable rate to a fixed rate. Locking into a low fixed rate can protect you from rising interest rates in the future. Monthly payments with fixed rates are generally easier to budget for since the amount will stay consistent throughout the entire life of the loan.
Lower Your Interest Rate and Monthly Payment
Lowering your monthly mortgage payment can have a positive impact on your finances. A lower interest rate will:
- Drastically reduce your monthly payment
- Could save you thousands of dollars in interest over the life of the loan
- Allows you to build up equity in your home faster
- Pay off your loan balance
Managing Your Credit
Achieving better credit scores is a great reason to refinance. If your credit score has improved because your mortgage payments have been made on time, you may be able to take advantage of decreased payments.