There are lots of benefits to refinancing the mortgage on your home. Here are 4 great reasons to refinance. The one that’s right for you will depend on your financial goals.
Pay off your home fast
Rates are low, and if you’re looking to pay off your home faster you may benefit from a refinance to a 10, 15, or 20 year loan. Rates on these loan terms are generally lower than the 30 year fixed rate. Typically, the lower the term, the lower the rate. Historic low rates allow for affordable payments on short terms. And, you’ll save lots of interest over the life of the loan. You may be surprised at how fast and affordable it can be to pay off your mortgage.
Cancel mortgage insurance
You may have paid down your mortgage quite a bit since you took out your loan. If you put less than 20% down when you purchased your home, you probably carry mortgage insurance. The good news is that you can drop mortgage insurance with a refinance if your loan to value is at 80% or less. Take the balance on your mortgage and divide it by your home’s current value. If you’re at or below 80% you may be eligible to drop mortgage insurance by refinancning.
Take cash out
You can refinance your current mortgage to borrow more money and get “cash out’ of your home. You can use the cash for anything you like: home improvements, debt consolidation, education, an emergency fund, or even a down payment on a new property. A cash out loan works just like a rate and term refinance, except at closing you receive cash for the additional funds you borrowed.
Lower your payment
You can lower your payment by stretching out your current balance over a new 30-year term. It will take longer to pay off your loan, but your payment will drop. You can also lower your interest rate by choosing a program at a better rate than you currently have. Keep in mind that may be an ARM with a lower rate which is fixed for one-to-ten years and then adjusts annually based on the market rate. There is typically a trade-off between immediate savings and long-term costs. But you can always choose to accelerate your repayment as your finances improve.
Interested in meeting your financials goals with a refinance? Fill out the form below!