It's no secret that buying a home is an investment, but maybe you've already made a house purchase and are wondering, "Should I refinance my home?" Refinancing–which is the act of paying off an existing loan with a new one–is essentially applying for a new loan with different terms than the original. Some people choose to refinance for a more favorable interest rate while others wish to tap into their home's equity. There are a variety of refinance options available, and today we offer you four.

Lower your monthly payment
Even small fluctuations in your interest rate can have an impact on the cost of your monthly mortgage payment. If you are refinancing your home, and the interest rate goes down, your monthly payment is likely to be reduced as well. One way to use this to your advantage is to apply the additional money you are saving each month to the principal of your mortgage to pay the loan off more quickly.

Lower your interest rate
Attempting to lower the interest rate on their mortgage is one of the most popular reasons people choose to refinance. Known in the industry as a "rate-and-term" refinance, this type typically involves shortening your loan term in order to pay it off more quickly with a lower interest rate. If your budget can handle a shorter loan term and potentially higher payment, this type of refinancing could be a good option for you.

Switch mortgage types
An adjustable-rate mortgage (ARM) may have made the most sense when you first purchased your home, but if the fluctuating interest rate has become too demanding for your budget, it may be a good time to refinance. Refinancing could allow you to switch from an adjustable-rate mortgage to a fixed-rate mortgage or vice versa. In a fixed-rate mortgage, your interest rate will remain the same throughout the life of the loan, which may be a more stable choice for some.

Pay off the loan faster
Over the course of our lives, our financial situations change. If you make considerably more money now than you did when you first took out your mortgage loan, refinancing may be a good option for you. You may be able to choose a shorter-term loan which may help you in building equity and paying off your home more quickly.

Refinancing a mortgage is an important decision that could have a positive impact on your overall financial health. If the timing is right, and it could potentially lower your monthly mortgage payent or interest rate, it may be worth considering. If you are interested in refinancing your mortgage or are in the market for a new home, someone from our Mortgage team would be happy to speak with you. You can find more information about DCCU's mortgage options and our Mortgage team here.

This article is for general information only and not intended to provide specific advice or recommendations for any individual.