What is a 30 Year Fixed Refinance?
By Gretchen Wegrich Updated on 6/18/2013
A 30 year fixed refinance is a mortgage loan that replaces your existing mortgage with a new loan at a better interest rate. A 30 year fixed refinance extends the life of the loan to 30 years and typically lowers your monthly payment.
How to tell if a 30 year fixed refinance is right for you
If your current mortgage rate is higher than the market average or if you want to extend the life of your loan in order to lower your monthly payments, a 30 year fixed refinance may be a smart choice. A refinance can help you save money on both your monthly mortgage payments and the total cost of interest over the life of the loan.
A fixed rate refinance is especially beneficial if you currently have an Adjustable Rate Mortgage (ARM) that has reached the end of its initial fixed period.
A refinance can also help you access your home equity by allowing you to borrow more than the remaining balance on your current loan. The excess cash can be used to pay for home improvements, medical bills, college tuition, and other expenses.
If you’re stuck in an unfavorable mortgage, a refinance is a great way to secure better terms and rates. This can save you a significant amount of money over the life of the loan. Many homeowners refinance at least once during the time that they own their homes.
What to know about 30 year fixed refinances
By extending your loan to a 30 year period, you may increase the amount of interest paid on the loan. For some people, the benefit of lowering their monthly mortgage payment outweighs any other financial considerations.
For others, refinancing to a lower interest rate allows them to save over the life of the loan in spite of increasing the loan term.
Talk to a local lender to determine whether a 30 year fixed refinance is a smart financial choice for you.
