Interest rates are constantly shifting, leaving Indiana homeowners wondering whether or not they should refinance their mortgage. The reality is, there's no right answer for everyone. Deciding to refinance depends on your short-term and long-term goals, as well as how rates today compare to your current APR.

Here's everything you need to know about refinancing your mortgage in Indiana. 

When to Refinance Your Indiana Mortgage

There are usually four reasons why homeowners think about refinancing their mortgages:

You qualify for a lower rate: Perhaps interest rates have gone down since you bought your home. Or even if you purchased in a high rate environment, maybe your credit score has improved. Either scenario could help you qualify for a lower rate, which could lower your monthly payment and save you loads over the rest of your loan term.

You can drop your mortgage insurance: Most conventional loans automatically drop off your private mortgage insurance when your home equity reaches 20%. But there are many variables when it comes to FHA loans. For loans originated after June 3, 2013, for instance, the mortgage insurance premium (MIP) won't be canceled until you've made payments for 11 years — and only if you made a down payment of 10% or more. If your down payment was smaller, you must refinance the loan in order to get rid of your MIP.

You want to cash out equity: Eligible Indiana homeowners may choose to do a cash out refinance. This lets you take out a new loan with a larger balance. You then receive the difference between your previous mortgage balance and the new one as cash.

You want to change your loan term: Maybe your variable rate is about to adjust or you want a shorter loan term to pay off debt and build equity faster. All of the terms associated with a refinance can be changed to meet your goals.

What to Consider Before Refinancing

Refinancing can come with a number of benefits. But before you start rate shopping, take a look at any potential drawbacks. For instance, refinancing typically comes with closing costs. Compare different lenders to make sure you're not paying more than you need to. Also compare those numbers to your future savings. Will the savings pay for the fees in a reasonable amount of time? How long will it take to break even?

Another consideration is how to handle cashing out some of your equity. It's important to have a clear plan for that money. A cash out refinance reduces your home equity and potentially extends your payoff timeline. So you need to be strategic with your plan for using those funds.

Refinance with U S Federal Credit Union

Need some guidance with whether or not to refinance your Indiana mortgage? Our team of experienced mortgage lenders is here to help.

Mortgage applications taken by appointment only.

Call our Valparaiso Office Today!

Elizabeth and Valerie – U S FCU Mortgage Specialists
Valparaiso Office
334 W. US HWY 30
Valparaiso, IN 46385
219-548-4600

Contact U S FCU today and we'll help you walk through different scenarios to meet your financial goals!