Debt management is an essential skill for anyone with long term goals in Sacramento, CA. Without good debt management, you can’t maintain a decent credit score, keep student loans or car payments under control, and, perhaps most important of all, get approved for a mortgage that can lead to homeownership.
But even once you get a mortgage, that doesn’t have to be the end of the cycle. It may not make sense once you have a mortgage to get another mortgage. But in some situations, refinancing a mortgage can result in reduced mortgage management. Here’s how it can help.
Lower Interest Rates
Banks make their money from customers on the interest rates they pay on their debts, such as credit cards and mortgages. However, when it comes to mortgages, there is nothing fixed about these interest rates, and they can fluctuate quite a bit over the years, based on the economic environment.
If you settled in for the “long haul” with a 30-year mortgage several years back, you might find that the current interest rates are at historic lows compared to what you were initially locked into. Depending on your situation, dropping your 30-year mortgage in favor of a new 30 year, or even a 20-year mortgage may save you a lot of money just based on lower interest rates alone.
Your Credit Score Is Better
Another way to get lower interest rates is to be a much “safer prospect,” which is something that often happens if you start with a poor credit rating but, over time, manage to acquit yourself and get that score up. In the USA, a good credit score can open many doors forgoing protocol like requiring a significant deposit, or, in the case of refinancing a mortgage, getting much lower interest rates.
If you now have a much-improved credit score, talk to a financial expert about your mortgage situation. You may find that this improve credit score can even improve less ideal situations in your past, like your mortgage conditions.
Your Financial Situation Is Better
Finally, if you’ve paid off other debt, have secured a higher paying job, or are now partnered with someone else for even more financial power, refinancing your mortgage can lead to a shorter period of management. For example, if other debts like car payments and student loans are paid off, and you’re sure you’ve got your credit card spending well in hand, your sole remaining debt is your mortgage.
If you refinance your mortgage with this increased payment power, it’s possible to get a shorter mortgage, with lower interest rates, and a higher rate of payment per month to match your economic acumen. This can dramatically shorten both the time and money you spend paying for that mortgage since your interest rates will also be lower.
If you’ve had your mortgage in Sacramento, CA for a while and are thinking about refinancing, we can help. Contact Professional Mortgage Associates, and look at your debt situation, your financial standing, and find ways to optimize your debt and get it under even more control.