Is It Time to Refinance Your Home Loan? Here’s What You Should Know!
Whether you're hoping to lower your monthly payment, pay off your mortgage sooner, or tap into your home’s equity, refinancing your home loan could be a smart financial move. At Prospera Credit Union, we meet you where you are—whether you're just curious or ready to refinance. Let's have a conversation about your financial journey and see if refinancing is the right step to help you prosper.
Here’s a breakdown of how refinancing works, why members consider it, and how to decide if it’s right for you.
What Is Home Loan Refinancing?
Refinancing means replacing your current mortgage with a new one—usually with different terms. You may refinance through your existing lender or apply with a new one—whichever offers the best terms for your situation. The new loan pays off your original mortgage, and you begin making payments on the new loan going forward.
Why Refinance?
There are several common reasons why members choose to refinance:
1. Lower Your Interest Rate
This is one of the most popular reasons to refinance. If rates have dropped since you bought your home—or if your credit score has improved—you may qualify for a lower rate, which could save you thousands over the life of the loan. Be sure to compare the Annual Percentage Rate (APR), not just the interest rate, to account for all loan cost and remember that rates and terms depend on individual creditworthiness and market conditions.
2. Reduce Your Monthly Payment
By lowering your interest rate or extending your loan term, you can ease your monthly budget. Keep in mind that extending your loan term may lower monthly payments but increase total interest paid over the life of the loan.
3. Shorten Your Loan Term
Want to pay off your mortgage faster and build equity quicker? Switching from a 30-year to a 15- or 20-year loan can help—though monthly payments might go up.
4. Switch Loan Types
For example, refinancing from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage can protect you from future interest rate increases, provide greater long-term cost stability, and support more accurate household budgeting—especially in a rising rate environment.
What to Consider Before Refinancing
Refinancing isn’t always the best option for everyone. Ask yourself:
- What are the closing costs? Refinancing comes with fees (typically 2–5% of the loan amount). Will your long-term savings outweigh them?
- How long do you plan to stay in your home? If you’re planning to move soon, you may not recoup the cost of refinancing.
- Will your monthly payment or loan term change? Make sure the new loan aligns with your goals and budget.
At Prospera Credit Union, we’re here to guide you toward smarter financial choices. When you refinance with us, you’ll enjoy:
- Local decision-making and a team who knows your needs
- Clear, honest answers to your questions—no pressure
- Competitive rates with personal guidance
Whether you’re just exploring options or ready to get started, we’re here to guide you through it.
Schedule a personalized consultation with our lending team. We’ll evaluate your current loan, financial goals, and market conditions to determine whether refinancing is a smart move for you.