5 Reasons to Refinance Your Mortgage
Refinance Your Mortgage
If you’re like most people, your mortgage is the single largest debt you carry. That’s why it’s important to make sure that your mortgage not only meets your current needs but that it will continue to serve you well into the future as well.
Whether you want to make some large purchases or simply want to rest easy knowing that you can handle any type of emergency, there are many good reasons to refinance your mortgage.
Here are five reasons why you may want to:
Save Money on Interest
If you currently have a mortgage and want to reduce your monthly payment, refinancing could be a good option.
Even if you have decent credit, refinancing a home mortgage can take time because it requires an appraisal of your home.
Once you’ve refinanced, you’ll be able to start saving money on interest.
Take advantage of low-interest rates by shopping around for a new mortgage rate or another type of loan that could give you better terms, such as an adjustable-rate loan with no prepayment penalty.
Pay Off Your Home Sooner
If you’re wondering how to pay off your mortgage early, one of your first considerations should be refinancing.
Refinancing has a range of benefits, including breaking the mortgage up into shorter terms.
While it may not seem like much, this can all add up to thousands of dollars in savings over time.
Eliminate PMI
Another reason to consider refinancing your mortgage is to eliminate your private mortgage insurance (PMI).
If you’re putting less than 20% down on your mortgage, chances are you’ll be required to pay PMI.
This costs an average of $60 per month and can add tens of thousands of dollars in extra interest.
If your home value drops, which can happen during a financial crisis or economic downturn, you may even owe PMI when you sell your home or refinance.
Before making that hefty payment each month, consider refinancing with a loan that doesn’t require PMI.
You could save yourself thousands of dollars and get more favorable terms for other aspects of your mortgage.
Consolidate Debt
One of the biggest reasons homeowners refinance their mortgage is to consolidate their monthly payments.
This way, homeowners can refinance to get a lower rate through consolidation.
For example, if you’re currently paying more than 3% on your home loan, consider refinancing.
Consult with a mortgage professional to determine the best option for consolidating your debt through refinancing.
Change to a Fixed Rate
If you’re interested in refinancing, consider changing to a fixed-rate mortgage.
Fixed-rate mortgages let you lock in an interest rate for a set period.
Since your payments will remain unchanged, they’re simpler to budget for and offer more long-term stability than adjustable-rate mortgages (ARMs).
When rates drop, many borrowers decide that refinancing is worth it.
For instance, if you borrow $300,000 at 4 percent and today’s rate is 3.5 percent, you could save $112 per month on your payment with refinancing.
Refinancing your mortgage can have many benefits.
If you’re ready to get started with this process, be sure to keep this information in mind.
Category: Mortgage
