What is a 30 Year Fixed Refinance?By Gretchen Wegrich Updated on 11/22/2013
A 30 year fixed refinance replaces your existing mortgage with a new loan at a better interest rate while extending the life of the loan to 30 years. This is a most popular refinance product at times when the mortgage rates are low.
How to tell if a 30 year fixed refinance is right for you
- Your current mortgage rate is higher than the market average
- You want to extend the life of your loan in order to lower your monthly payments
- You currently have an Adjustable Rate Mortgage (ARM) that has reached the end of its initial fixed period.
- You want access to home equity. By allowing you to borrow more than the remaining balance on your current loan, 30 year fixed refinances give you extra cash that can be used to pay for home improvements, medical bills, college tuition, and other expenses.
- You’re stuck in an unfavorable mortgage and want to change the loan terms.
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.
About The Author:
Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.