We’ve all heard the terms “mortgage” and “interest” in movies, TV shows, and even books. But what exactly are they? Interest rates are the percentage at which money can be borrowed or earned, typically in reference to loans or investments. Low interest rates make borrowing cheaper, encouraging spending and investment, while high interest rates make borrowing more expensive, slowing spending and investment. Your mortgage is a loan secured against your property that provides you with long-term financing, enabling you to purchase real estate, pay for home improvements, or consolidate debt.
So what happens when you want to change your established mortgage rate? Refinancing your home is one of the biggest decisions you’ll ever make. A mortgage refinance is the changing of a mortgage when the interest rate at the current home loan is higher than that of the new one. While it could be a great way to save money, you should not make the decision hastily- especially during a changing economic market. You may want to consider refinancing if you’re paying more than you need to on your home loan, or if you want to take out cash from the equity in your home.