Refinancing Your Mortgage

An alumnus of Boston University School of Law, Joseph Zoppo’s practice areas encompass a wide range of legal disciplines. As a partner at Peres, Zoppo & Associates, PLLC, Joseph Zoppo assists with various mortgage services, including refinancing.

You typically refinance a mortgage, or obtain a new loan on different terms, to reduce monthly mortgage payments via a reduced monthly interest rate. You may be eligible for a lower rate because of market conditions or improvements in your credit rating. Lower rates could allow you to accumulate equity faster.

Changing the length of your mortgage may also help. A longer term will reduce your monthly payment, but it will also increase the length of the mortgage and total amount of interest paid.

Switching to a shorter mortgage will usually lower your interest rate and total interest paid. However, it will likely increase your monthly payment, as you are paying more of the principal. 

Adjustable-rate mortgages (ARMs) have a variable interest rate that rises and falls with the market, changing your monthly payment. Moving to a fixed-rate mortgage obviates worry about such events (although taxes and fees could increase anyway). It is also possible to obtain a new ARM at a lower range of rates, smaller increases, or lower payment caps. 

Refinancing can also be a cash source for expenses such as education. Called a cash-out, this represents the difference between your remaining balance and your home value. You could receive this amount in a lump sum, although this involves reducing equity. Another option is a home-equity loan or line of credit.